Deepal Wannakuwatte, former owner of the Sacramento Capitols professional tennis team, has been ordered to pay more than $100 million in restitution to victims of a decade-long Ponzi scheme he perpetrated.
From 2002 until his arrest in February 2014, Wannakuwatte defrauded between 150 and 200 individuals, companies, and government entities out of $230,000,000 through a classic Ponzi scheme. An investigation began after a tip from an investor in 2013 and involved a joint investigation by the Federal Bureau of Investigation, the Internal Revenue Service, and the Federal Deposit Insurance Corporation, Office of the Inspector General.
The investigation determined that Wannakuwatte told his “investors” that two of his companies were involved in the international sale of latex gloves and that it did business with government agencies, in particular the Department of Veterans Affairs (VA). He further avowed that these companies had annual revenues in the tens of millions of dollars. Wannakuwatte developed false documents and relationships to prove his bona fides to investors, including false tax returns overstating income, false corporate documents, and a fake VA representative. While the company did sell latex gloves and did business with the VA, revenues were only a fraction of what he advertised and the business was in fact losing money. Wannakuwatte used the money from investors to cover these losses and pad his own pockets.
He purchased the Capitols with his ill-gotten gains and moved them to Las Vegas in February 2014. The rebranded Las Vegas Neon went defunct almost immediately after his arrest.
Wannakuwatte was sentenced to 20 years in prison after an emotional sentencing hearing on November 13, 2014. There, the judge said, “Deepal, you are a sociopath. . . . You are a liar, a serial liar. A thief, a serial thief.” In February 2015, he was ordered to forfeit more than $3 million worth of real estate, vehicles, interests in financial accounts, cash, and business interests.
The final chapter in the case came to a close on March 5, 2015, when the judge ordered that Wannakuwatte pay a total of $108,199,452.63 in restitution. Wannakuwatte claimed he had already paid back some of the victims, but the court determined that he had not met his burden of showing this to the court. Unfortunately, the victims will likely remain short-changed. While the forfeitures will go toward restitution, the remainder of the roughly $105,000,000 will be paid back at a minimum rate of a mere $25.00 per quarter during the course of his incarceration.
—Joseph W. Martini, Wiggin and Dana LLP, Stamford, CT