North Carolina man sentenced to more than three years in prison, ordered to pay nearly $1 million restitution in connection with Ponzi scheme

Published 3:09 pm Monday, February 19, 2024

A Cary man was sentenced to 44 months in the Federal Bureau of Prison and ordered to pay almost $1 million in restitution to victims in connection with a Ponzi investment fraud scam, according to a news release from the U.S. Department of Justice, Eastern District of North Carolina. Kumar Arun Neppalli, 57, previously pleaded to guilty to 17 counts of wire fraud.

The investigation revealed Neppalli relied on his good standing within the Indian American community in Cary to defraud numerous victims under the false pretense that he would invest their money in a legitimate real estate development in the Orange County area. “Neppalli leveraged his employment with the town of Chapel Hill to convince the victims that he had insider knowledge of development plans with respect to the purported real estate,” stated the release. “Neppalli would request a specific amount of money within a short timeframe, sometimes the same day, to facilitate closing the transaction. Neppalli promised a return of the principal investment plus a profit within a few months, often asking his victims not to discuss the transaction with other members of the community or referencing a non-disclosure agreement.”

Neppalli used the funds from these victims to pay back earlier investors who believed that he was returning their original investment and legitimate capital gains, stated the release.

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“Neppalli was a conman running a classic ‘affinity fraud,’ targeting Indian American investors in the Triangle for their hard-earned savings,” said U.S. Attorney for the Eastern District of North Carolina Michael Easley. “It was a pure Ponzi scheme – stoking false hopes of financial success, but using new investor money to pay off earlier investors, while masquerading those payments as legitimate profits. Investors should beware affinity fraudsters like Neppalli promising outsized returns on short timelines while exploiting membership in a particular religious or ethnic group to gain credibility and target victims.”

“Neppalli swindled members of his own tight-knit community. He pretended to have inside information to make them rich, instead many victims lost their entire life savings. While fraud of this magnitude can have a lasting impact, we hope the time Neppalli must serve in federal prison brings a sense of justice to his victims,” said Robert M. DeWitt, the FBI Special Agent in Charge in North Carolina.

Easley made the announcement after U.S. District Judge Terrence W. Boyle announced the sentence.

The Federal Bureau of Investigation’s Triangle Fraud Taskforce led the investigation. Assistant U.S. Attorney David G. Beraka is prosecuting the case.