Feb. 24--In the months leading up to his arrest on fraud charges, the owner of the former Sacramento Capitals tennis team was pursued by creditors for nearly $4.6 million in unpaid debts tied to an expansion of his medical-supply business.
Deepal Wannakuwatte and his two West Sacramento medical-supply companies, RelyAid Global Healthcare Inc. and International Manufacturing Group Inc., were sued by business lender General Electric Capital Corp. last August after defaulting on an IOU. GE Capital also sued Wannakuwatte's wife, Betsy.
According to GE Capital's lawsuit, pending in U.S. District Court in Sacramento, RelyAid borrowed the funds to build a latex glove factory in Olivehurst. RelyAid announced plans for the factory a year ago, saying it would create 175 jobs in the struggling Yuba County community. The plant hasn't yet opened, according to the Marysville Appeal-Democrat.
A judge last Wednesday ordered Wannakuwatte to give GE a $3 million private King Air plane that had been pledged as collateral on the business loan. The plane is parked at the regional airport in Lincoln, and a business that Wannakuwatte set up to maintain ownership of the plane has been in bankruptcy protection since last year.
One day later, the 63-year-old Wannakuwatte was arrested on charges of defrauding investors in International Manufacturing, described in court papers as a wholesale distributor of medical and dental supplies. Both of Wannakuwatte's companies have offices on F Street in West Sacramento.
Wannakuwatte, dressed in an orange jail outfit, made an initial appearance Friday before U.S. Magistrate Judge Carolyn K. Delaney in Sacramento. He was returned to Sacramento County Main Jail, where he is being held without bail.
An FBI affidavit unsealed Friday charged that Wannakuwatte took in more than $125 million in the past 10 years from investors who were financing International Manufacturing's contracts to supply gloves to the U.S. Department of Veterans Affairs. While he allegedly told investors that International Manufacturing had VA contracts totaling $100 million a year, the actual sales came to just $25,000 a year, according to the affidavit.
The affidavit said Wannakuwatte was running a Ponzi scheme, paying investors not with profits from his glove contracts but with dollars provided by other investors.
For the past two years, Wannakuwatte's family has owned the Sacramento Capitals, a member of the World TeamTennis league. Earlier this month, the team announced it was moving to Las Vegas, ending a sometimes tumultuous 28-year run in Sacramento because of difficulties in securing a permanent home stadium. The team was renamed the Las Vegas Neon.
The league released a statement to the Las Vegas Review-Journal saying, "We just became aware of this matter and are awaiting more information, so we have no further comment at this time."
Other legal problems have been piling up for Wannakuwatte. RelyAid was sued in Yuba County Superior Court last month by a construction firm for $123,650 for work done on the Olivehurst factory, according to the Appeal-Democrat.
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