Former Deepal Wannakuwatte investors endured a tough 2014. Wannakuwatte’s arrest in February was the first jolt that struck hard at his Northern California investors. And the shocks continued as law enforcement officials disclosed that Wannakuwatte had raised more than $200 million over the previous decade.
Unwitting or otherwise, Ponzi investors are often unprepared when the next shoe drops. Beverly McFarland, the Chapter 11 Trustee for Wannakuwatte’s International Manufacturing Group, Inc. (“IMG”), likely dropped that second shoe today in her Case Status Report. McFarland revealed that she is seeking Bankruptcy Court approval to employ a contingency lawyer in pursuit of “Major Third Party Litigation Claims.” Likely defendants include those with “alleged knowledge of the Ponzi scheme” who substantially participated in aiding and abetting in the scheme. Other likely defendants include those involved as potential partners of Wannakuwatte.
Two members of the Official Committees of Unsecured Creditors in the Wannakuwatte and IMG Chapter 11 cases have been informed that they have a potential conflict in fulfilling their duties on the Committees, given the likelihood of their being named as defendants in Major Third Party Litigation Claims. One member immediately resigned; the other member has not.
Trustee McFarland noted in her Status Report that “soon after” appropriate Bankruptcy Court approvals are secured for the employment of litigation counsel, “a lawsuit will be filed” against an undisclosed member of the Committee “and related individuals or entities.” McFarland observed that “such a lawsuit, if one is filed, will provide a great deal more detail as to the nature of the issues involving” the undisclosed Committee member and related individuals and entities.
If we remember one thing about Ponzi-related litigation, it’s nearly always a tough fight. Stakes are high, and lines are sometimes difficult to draw between innocent investors and those who saw or should have seen the red-flag indicators of a Ponzi scheme.
When you’re seeking out an attorney, you’ve got a challenge you need resolved. And not just any attorney will do – you need a trusted name, someone who stands for legal excellence and compassion. Practicing law in Sacramento and throughout Northern California for 38 years, Michael Hackard of Hackard Law has earned the trust of his clients by exercising leadership in the management of business and legal challenges. Now Michael Hackard has received additional recognition for his work, receiving the status of Super Lawyer this July.
Why should the title of Super Lawyer matter to someone in need of legal services? Super Lawyers is a nationwide registry of outstanding attorneys who have demonstrated high skill and professionalism in their field. In order to be honored with this status, a nominated attorney must first undergo a process of peer review, independent research and evaluations by colleagues.
While everyone likes recognition, the most essential factor in play is how that attorney can effectively help clients – and all through his career, Michael Hackard has demonstrated an enduring commitment to serving client needs and their best interests.
He worked tirelessly on my behalf and I am extreme grateful for the personalized service he provided.
He is the ardent professional, offering expertise, loyalty, intelligence, and patience. He communicates confidence!
The past years have been challenging, and Michael has always worked hard to create the best possible outcome for me.
Here at Hackard Law we’re proud that Michael Hackard has earned the title of Super Lawyer, but most importantly, it’s just another reminder of his dedication to clients. Because beyond all the titles and awards, Michael Hackard has shown, year in and year out, how he’s there to fight for you in your time of need.
The Wannakuwatte bankruptcy cases are both now under the supervision of Chapter 11 bankruptcy trustees. As we reported last week, Deepal Wannakuwatte’s personal bankruptcy is being handled by Hank Spacone, a Sacramento CPA with a deep background of administering similar liquidations and reorganizations. Now we can also confirm that Rocklin-based Beverly N. McFarland, a consultant who has a wealth of experience in complex asset management and disposition, has been charged with heading the Chapter 11 bankruptcy for Wannakuwatte’s International Manufacturing Group (IMG), a key component of his massive Ponzi scheme. According to court documents, IMG racked up $120.4 million worth of debt to investors and other creditors while possessing only $1.6 million in assets after the fraudulent business had already imploded.
In the latest news from the Deepal Wannakuwatte Ponzi bankruptcy, well-known Sacramento CPA Hank M. Spacone has been appointed the Chapter 11 Trustee to oversee the case in US Bankruptcy Court. With an extensive background in the local business community, Spacone has already managed multiple bankruptcies, liquidations and reorganizations totaling in the hundreds of millions. In the upcoming Wannakuwatte case, he will be charged with administering a $134 million bankruptcy that resulted from a Ponzi scheme that pitched supposedly lucrative contracts with the VA for gold-plated latex gloves. Having made a plea bargain and set to be sentenced in his criminal matter on July 24th, Wannakuwatte has declared only about $15 million in assets, making the likelihood of clawback litigation quite high.
Here at Ponzi Clawbacks, we came into possession of an official document of the American Ponzi Association (APA). We can’t vouch for its veracity, since the substance of any Ponzi schemer’s pitch is patent nonsense.
Annual Meeting of the American Ponzi Association
Dear Esteemed Fellow Ponzi Schemer,
You are cordially invited to attend our annual meeting of the American Ponzi Association, to be held in Las Vegas, Nevada on September 31st, 2014. We thought Las Vegas to be the perfect venue for our conference, since this venerable city is renowned for its transparency, sobriety and honest business practices – just the sort of image the APA seeks to convey through its impeccably ethical schemers. Plus, the town has a down-home feel and distraction-free environment to keep us focused on what we do best: giving back to the community. We’ve chosen to stay at the beautiful Sands Hotel – yes, it’s still there and better than ever!!! And we ask that instead of calling the Sands (sometimes their phone doesn’t work), simply arrange your accommodations with Jailin Prance, our office assistant – she’ll take your credit card information.
Along with a stupendous all-you-can-eat buffet that only the Sands is famous for, we’ve got a great set of discussion topics lined up for this year’s conference. Here’s an exciting list of some highlights that will knock your socks off:
Green is Good: “Green” is in, and it’s a great label for any Ponzi machine – folks love to help the environment, so let that help you! Speaker: Chandra Gumtree
Fleecing the Faithful: Megachurch congregations need some feel-good fake forex programs to help them build their best life now! Speaker:PastorGlitterbug Jones
Funhouse of Fraud: The best part of any Ponzi scheme is enjoying all that “investment” cash. How many yachts are too many? Can they come with midget strippers on board as part of a package deal? Speaker: Jayden Bobinson
Let’s Make a Deal: Remember you’ll eventually get prosecuted and likely end up in prison once the scheme collapses. What are the optimum conditions for a plea deal with your new friend, the US Attorney? Have no fear, just leave it to Bernie to explain. Speaker: Bernie Madoff
Prime Bank Buffoonery: Everyone loves clowning around in prime bank schemes – they’re a scream! What sort of crazy returns can you offer an investor before you burst into uncontrollable laughter? 1000%? 10,000%? The sky’s the limit! Speaker: Honus Bozogold
Rubber Gloves: Tell investors the VA pays multimillions for your lucrative latex wonder-gauntlets – the business opportunity of a lifetime. Speaker: Weepal Dannakuwattee
Robots: From imaginary trade software to magical algorithms, we’ll even help you build a robot out of cardboard to impress tech-savvy investors. Speaker: Tairy Brainegarner
Party Favors: A very special keynote speaker will deliver his presentation from an undisclosed location in the federal prison system. Pivotal question: Should you hold sex parties for potential investors or only for active clients? Speaker: Scott Rothstein
We’ll be hosting these and other truly incredible panels to keep you at the top of your Ponzi game, so call Jailin and reserve your spot at the conference at the Sands today!