A North Carolina man was sentenced last week to nearly four years behind bars and ordered to pay $1 million in restitution for his involvement in a real estate Ponzi scheme.
Kumar Arun Neppalli, 57, had previously pleaded guilty to 17 counts of wire fraud before his sentence of 44 months in prison, according to a press release by the U.S. Attorney’s Office.
Neppalli exploited his reputable standing within the Indian American community in Cary, North Carolina, to carry out his fraudulent scheme, prosecutors said.
Operating under the guise of investing in a legitimate real estate development in Orange County, Neppalli utilized his employment with the town of Chapel Hill to deceive victims. He falsely claimed to possess insider knowledge of development plans related to an alleged real estate venture.
Neppalli requested money from victims within short time frames, sometimes on the same day, under the pretext of facilitating a transaction closure. He promised investors a return of their principal investment along with a profit within months.
He often urged victims to maintain confidentiality about the transactions, citing nondisclosure agreements.
The funds obtained from his victims were then used to reimburse earlier investors, creating the illusion that he was returning their original investments and legitimate capital gains.
U.S. Attorney Michael Easley labeled Neppalli as a conman engaged in “affinity fraud,” specifically targeting Indian American investors in the Triangle area. The scheme operated as a classic Ponzi scheme, raising false hopes of financial success and using new investor funds to pay off earlier investors, prosecutors said.
The announcement was made by U.S. Attorney Michael Easley after U.S. District Judge Terrence W. Boyle handed down the sentence.
The investigation was led by the FBI’s Triangle Fraud Taskforce, with Assistant U.S. Attorney David G. Beraka prosecuting the case.
Real estate Ponzi schemes aren’t new.
Last year, a Los Angeles man was charged with 110 felonies and three special allegations for allegedly running an $8 million Ponzi scheme involving the development of buildings.
Between 2010 and 2020, Jeffrey H. Tamkin allegedly ran the Tamkin Development Corporation and the Public Facilities Investment Corporation, the California Attorney General said in a news release.