$125 Million Latex Glove Ponzi Scheme
In California, a former tennis team owner was arrested earlier this year and charged with defrauding investors out of at least $125 million through his medical equipment businesses, International Manufacturing Group (“IMG”) and RelyAid. Deepal Wannakuwatte, 63, was arrested in February 2014 and indicted on federal fraud charges, including mail fraud and wire fraud, which each carry maximum 20-year prison terms.
According to authorities, Wannakuwatte’s companies solicited investors by telling them it had lucrative contracts totaling at least $100 million with the U.S. Department of Veterans Affairs (the “USVA”). Based on these representations, IMG and RelyAid raised at least $125 million from numerous investors.
However, while IMG and RelyAid did have a business relationship with the USVA, authorities alleged that this relationship was grossly overstated. Rather than having annual sales of $100 million, it appeared that annual sales were closer to $25,000. To create the appearance of a successful business, Wannakuwatte is accused of doctoring actual invoices with significant markups. For example, a $257 invoice was modified to create a $12 million invoice.
The companies came under suspicion after a creditor filed a lawsuit alleging nonpayment of a loan.
Among other things, Wannakuwatte was ordered to turn over “a $3 million private plane that had been pledged as collateral.”