SEC instructs San Diego-based companies and their principal to operate $ 15 million ponzi scheme
Securities and Exchange Commission v Fusion Hotel Management, LLC, Fusion Hospitality Corporation and Denny T. Bhakta, # 3: 21-cv-02085-L-MSB (SD Cal. Filed December 14, 2021)
SAN DIEGO, CA (STL.News) The Securities and Exchange Commission today announced charges against Fusion Hotel Management, LLC, Fusion Hospitality Corporation, and their founder, Denny T. Bhakta of San Diego, California, for fraudulently raising at least $ 15 million from more than 40 individual investors.
According to the SEC complaint, filed on December 14, 2021 in the U.S. District Court for the Southern District of California, from at least January 2016 to January 2020, Bhakta and the Merger entities raised funds from investors telling them falsely that Fusion was for the purpose of buying blocks of hotel room reservations from major hotel chains and reselling those reservations at higher rates to Fusion customers, including a major airline. To attract investors, Bhakta reportedly touted Fusion’s track record, when in fact, the Fusion business was a sham. According to the complaint, Fusion did not engage in any activity of reselling blocks of hotel room reservations for profit, and the contracts and bank statements Bhakta provided to investors to lend credibility to this business. were fabricated. The complaint further alleges that, rather than using investor funds to buy and sell reservations as promised, Bhakta embezzled those funds for gambling and other personal expenses and to pay for alleged returns to prior investors.
The SEC complaint accuses Fusion Hotel Management, Fusion Hospitality Corporation and Bhakta of violating the anti-fraud provisions of Section 17 (a) of the Securities Act of 1933 and Section 10 (b) of the Securities and Exchange Act of 1934, rule 10b-5 below. The complaint seeks permanent injunctions, restitution with pre-judgment interest and civil penalties against all defendants.
The SEC investigation was conducted by Lance Jasper and overseen by Spencer Bendell of the Los Angeles regional office. Litigation will be led by Daniel O. Blau and overseen by Amy J. Longo. The SEC acknowledges assistance from the United States Attorney’s Office for the Southern District of California, the Federal Bureau of Investigation, and the Texas State Securities Board.