RALEIGH, N.C. (WNCN) — A 56-year-old Cary man was arrested Tuesday in connection with an alleged investment fraud scam.
A 23-count indictment unsealed on Tuesday accuses Kumar Arun Neppalli of relying on his good standing within the Indian-American community in Cary to defraud at least 12 victims or sets of victims by falsely promising to invest their money in a legitimate real estate development in Orange County, according to U.S. Attorney Michael Easley.
Neppalli allegedly used the victims’ money to pay back earlier investors who believed that he was returning their original investment and legitimate capital gains. Returning capital to earlier investors by defrauding new investors is commonly known as a “Ponzi” scheme.
“We are committed to protecting the investing public from financial schemes,” Easley said. “The U.S. Attorney’s Office is working closely with the FBI to identify, investigate, and pursue those who cheat people out of their hard-earned money.”
The indictment alleges that Neppalli would typically call the victims or talk to them in person to describe a local real estate investment opportunity, usually in Orange County, Easley said.
Neppalli allegedly leveraged his employment with the town of Chapel Hill to convince victims that he had insider knowledge of real-estate development plans.
The indictment said Neppalli would then request a specific amount of money within a short timeframe, sometimes the same day, to facilitate closing the transaction. He would then promise a return of the principal investment plus a profit within a few months while also asking his victims not to discuss the transaction with other members of the community or reference a non-disclosure agreement.
“Our investigation shows Neppalli abused the trust and confidence placed in him by fellow Indian-American community members,” said Michael C. Scherck, the FBI’s 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. Fraud can have an immediate and direct impact on people and communities, and the FBI remains determined to bring those who commit it to justice.”
Neppalli was indicted on 17 counts of wire fraud and six counts of conducting transactions in criminally derived property. He faces up to 20 years in prison for each count and potential fines.