Former Federal Agent Sentenced for Making False Statements in Connection with a Sexual Relationship with a Victim Witness
SACRAMENTO, Calif. — Deepal Wannakuwatte, 63, of Sacramento, pleaded guilty today to one count of wire fraud in furtherance of a long-running and large-scale fraud scheme, announced United States Attorney Benjamin B. Wagner, Special Agent in Charge Monica M. Miller of the FBI’s Sacramento Field Office, Jose M. Martinez Special Agent in Charge for the IRS-Criminal Investigation (IRS-CI) and Wade V. Walters Special Agent in Charge of the Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG).
Under the terms of his plea agreement, the government will recommend that United States District Judge Troy L. Nunley sentence Wannakuwatte to 20 years in prison, the maximum punishment allowable for the offense to which he pleaded guilty. In addition, the agreement requires Wannakuwatte to forfeit multiple properties, vehicles, business interests, and bank accounts to be used to provide restitution to victims.
According to the plea agreement, from 2002 to 2014, Wannakuwatte convinced more than 100 victims, including individuals, corporate entities, and financial institutions, to invest in a number of business opportunities by misrepresenting the financial worth of himself and his companies. Wannakuwatte’s companies, IMG and Relyaid, were involved in the international manufacture, shipment, and distribution of latex gloves. He falsely claimed that these companies did tens of millions of dollars in business with federal agencies every year, most notably the Department of Veterans Affairs. In 2013, Wannakuwatte claimed to have more than $125 million in VA contracts alone. In fact, while he did have a contract with the VA, it was worth up to only $25,000 a year.
In all, Wannakuwatte ultimately obtained well over $150 million from his victims. Contrary to his representations, Wannakuwatte used much of the money he obtained to pay himself and his family, make lulling payments to participants in his fraudulent investment schemes, and pay outstanding debts unrelated to his false representations.
“Mr. Wannakuwatte’s guilty plea brings to an end to one of the longest running, most extensive, and most damaging fraud schemes our region ever has seen,” said U.S. Attorney Wagner. “We are still calculating the total damage resulting from his scheme, but he caused well over $50 million in losses, and the total losses could be closer to $100 million. Together with the FBI and the IRS, our office moved swiftly to ensure not only that he would be held accountable for this crime, but also that we could take all steps possible to return remaining funds to his victims. The very substantial sentence that he is likely to receive should send a clear message that my office will continue to prosecute financial crimes like this one vigorously.”
“Wannakuwatte’s financial empire collapsed because it was based on fraud and deceit. Unfortunately, he left a trail of victims — individuals, businesses, government agencies, venture funds, and other lenders — who suffered significant losses,” said Special Agent in Charge Monica M. Miller of the Sacramento FBI. “The FBI is committed to working with our agency partners to aggressively pursue those who betray the trust of the public for personal gain.”
“This was not your average Ponzi scheme,” said José M. Martínez, Special Agent in Charge, IRS-Criminal Investigation. “The fraud involved hundreds of millions of dollars and more than 100 victims including individuals, corporate entities and financial institutions. The defendant conned investors through the use of false documents, inflated tax returns, and convincing lies. IRS-CI will continue to work closely with our law enforcement partners to aggressively pursue fraud schemes such as these.”
“The Federal Deposit Insurance Corporation (FDIC) Office of Inspector General (OIG) is pleased to have joined the Department of Justice and our law enforcement colleagues in conducting this investigation,” stated FDIC OIG Special Agent in Charge Wade V. Walters. “We are especially concerned when individuals like Mr. Wannakuwatte defraud our nation’s financial institutions. We are firmly committed to joint efforts such as this one in the interest of ensuring integrity in individual institutions and the financial system as a whole.”
Wannakuwatte used a variety of false and fraudulent means to back up his claims of financial success. For example, Wannakuwatte regularly provided investors with inflated financial statements that supported his claims that he had more than $100 million in sales with the VA. He also regularly provided victims with false corporate ledgers from IMG and Relyaid. Some ledgers falsely showed tens of millions of dollars in accounts receivable from the VA. Other ledgers falsely showed tens of millions of dollars in glove inventory.
Wannakuwatte also provided his victims with personal and corporate tax returns. Wannakuwatte actually reported and paid taxes on returns that falsely overstated his annual personal income and the annual gross receipts and sales for IMG. He used these returns to establish his financial credibility with financial institutions and individual investors.
On at least two occasions, Wannakuwatte set up fake conference calls between himself, a victim, and a person whom he directed to act as a VA representative. The conference calls were to convince victims of the value of the VA contracts and the relationship Wannakuwatte claimed to have with the VA.
Wannakuwatte’s plea agreement contains multiple provisions designed to return as much investor money as possible. He must disclose the existence of any assets or property that he obtained as the result of his scheme, and forfeit his interest in 16 properties, four vehicles, multiple bank accounts, insurance policies, business interests, and any tax refunds to which he may be entitled. Wannakuwatte’s properties are in Hawaii, Oregon, and in the counties of Sacramento, Yolo, and Yuba. They include his residence, vacation homes, and commercial properties. In addition, Wannakuwatte agreed to file for personal bankruptcy, and to file bankruptcy petitions on behalf of any business in which he may have an interest. These filings must be done by the end of May 2014 and should give creditor victims a forum to pursue claims against him.
This case is the product of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation, and the Federal Deposit Insurance Corporation, Office of Inspector General, Office of Investigations. Assistant United States Attorneys Michael Beckwith and Kevin Khasigian are prosecuting the case.
Wannakuwatte is scheduled to be sentenced by Judge Nunley on July 24, 2014. The plea agreement is subject to the approval of Judge Nunley. If the agreement is accepted, Wannakuwatte’s actual sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.