Indian-American held for defrauding community members in Ponzi scheme

New York: A 56-year-old Indian-American man has been arrested in North Carolina on charges of defrauding Indian community members in a Ponzi scheme asking them to invest in real estate property that would earn them profits.

Kumar Arun Neppalli, a resident of Cary was arrested on Tuesday upon the unsealing of a 23-count indictment in connection with an investment fraud scam targeted at Triangle’s Indian community in North Carolina, the US Attorney's Office Eastern District of North Carolina said in a news release.

Neppalli used ”his good standing within the Indian-American community in Cary” to defraud at least 12 victims or sets of victims into giving him funds under the false pretence that he would be investing their money in a legitimate real estate development, the news release said on Tuesday.

He used to ask the investors to give him money quickly - sometimes that day - and promised to return them the principal investment along with a profit within a few months.

“Our investigation shows Neppalli abused the trust and confidence placed in him by fellow Indian-American community members,” said Michael C Scherck, FBI Acting Special Agent-in-Charge.

“He promised to invest their money in property. Instead, Neppalli used the funds to pay back other people he swindled as part of his scheme; now, multiple victims are left without their much-needed savings,” said Scherck.

Neppalli used the money from his investors “to pay back earlier investors who believed that he was returning their original investment and legitimate capital gains,” said the release.

Returning capital to earlier investors by defrauding new investors is commonly known as a “Ponzi” scheme.

“The US Attorney’s Office is working closely with the FBI to identify, investigate, and pursue those who cheat people out of their hard-earned money," said US Attorney Michael Easley.

Neppalli is accused of 17 counts of wire fraud and six counts of conducting transactions in a criminally derived property.

He is expected to go to trial later this year and could face up to 20 years in prison if convicted.