Bank fraud alleged against former Sacramento Capitals owner
03/14/2014 12:30 AM
03/14/2014 11:30 AM
Deepal Wannakuwatte, the Sacramento businessman who crash-landed three weeks ago when he was arrested and jailed, was indicted Thursday by a federal grand jury on charges of bank fraud and false statements to a financial institution.
According to the three-count indictment, beginning in September 2011 Wannakuwatte sought a line of credit from San Jose-based Bridge Bank. He claimed the funds would be used to improve his medical glove manufacturing facility in Olivehurst, Yuba County, the indictment alleges.
Wannakuwatte informed the bank his West Sacramento companies, International Manufacturing Group Inc. and RelyAid Global Healthcare Inc., were engaged in the international manufacture, shipment and distribution of latex gloves and did more than $100 million of business every year with the U.S. Department of Veterans Affairs, the indictment states.
These claims, the indictment declares, were not true, but were made to make Wannakuwatte’s operations appear more creditworthy.
Based on these and other false representations, Bridge Bank authorized a $4.5 million line of credit, the indictment says. It says Wannakuwatte subsequently drew down on the line of credit, picking the bank’s pocket for approximately $4.3 million to which he was not entitled.
The bank did not respond to a call seeking comment.
Assistant U.S. Attorney Michael Beckwith, who is prosecuting Wannakuwatte, said at a bail hearing last week that it is suspected he conned investors in his glove business out of as much as $150 million.
U.S. Attorney Benjamin Wagner said Thursday it is “quite possible” that Thursday’s indictment will be superseded at some point with added charges to account for at least some of the investor fraud.
“Our investigation is continuing and, unless this matter resolves very quickly, it is likely there will be additional charges,” Wagner said. “Since Mr. Wannakuwatte is in jail, it was important that we move now on readily provable charges.”
A federal magistrate judge last week ordered Wannakuwatte, 63, held without bail as a flight risk. He has not yet entered a plea and is scheduled to be arraigned on March 21.
Some of his investors have targeted Wannakuwatte in federal court with civil lawsuits seeking to recoup what they allege they lost due to fraudulent claims similar to the ones purportedly made to Bridge Bank.
Wannakuwatte for the past two years owned the Sacramento Capitals tennis team, which announced in early February it was moving to Las Vegas as the Neon. Following his arrest, World TeamTennis revoked the franchise and eliminated the team from the league.
The money Wannakuwatte drained from the Bridge Bank line of credit was used not to improve the Olivehurst plant but to pay unrelated outstanding debts, Thursday’s indictment alleges.
It alleges that, between October and December 2011, Wannakuwatte provided the bank with a number of false documents, including personal and corporate tax returns that overstated his gross income and the gross receipts and sales for IMG, a false corporate financial statement from IMG that was ostensibly reviewed by a certified public accountant, and a bogus ledger detailing more than $25 million in accounts receivable from Veterans Affairs.
The indictment recounts a conference call set up by Wannakuwatte in December 2011 among himself, an IMG employee posing as a VA representative, and a Bridge Bank representative. At Wannakuwatte’s direction, according to the indictment, his employee told the bank’s representative that there were more than 60 invoices showing a total of more than $25.8 million owed by the VA to IMG.
In fact, the indictment says, there were no such invoices and no such debt.
Sacto 911 StaffBill Lindelof
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