Political donor pleads guilty to investment fraud scheme
By MATTHEW BARAKAT – ALEXANDRIA, Va. (AP) — A political donor and cable news commentator pleaded guilty Friday to federal criminal charges in what prosecutors described as a $30 million investment fraud scheme tied to his health-technology company.
Sreedhar Potarazu, 51, an ophthalmologist from Potomac, Maryland, was appointed to serve on the credentials committee to this year's Democratic National Convention, even though he has given to Republicans and Democrats. He was a frequent guest on Fox Business and other cable news shows, and in one appearance billed himself as a supporter of Republican John Kasich.
His name also appears in a series of hacked emails released by WikiLeaks showing DNC officials debating whether his donations of more than $300,000 merited a seat next to President Barack Obama at an event. DNC staffers also express frustration in the emails about Potarazu's persistence in seeking an audience with Obama.
The fraud scheme was unconnected to his political donations.
At a plea hearing Friday in U.S. District Court in Alexandria, Potarazu admitted he defrauded more than 150 shareholders in his McLean-based company, VitalSpring Technologies, by hiding his tax liabilities and lying about the company's finances.
Prosecutors say the fraud amounted to $30 million — Potarazu's lawyer, Stuart Nash, said his client admits his guilt but disputes the amount of the fraud. Potarazu, who is free on $5 million bond while he awaits sentencing, declined comment after Friday's hearing. He faces up to 15 years in prison.
Court records indicate one shareholder invested approximately $16 million.
At Friday's plea hearing, Potarazu told the judge, "I provided false information to some shareholders about the health of the company."
Prosecutor Jack Morgan said Potarazu used some of the company for his personal benefit, including personal car service and publication of his book, "Get Off the Dime."
The fraud also included a failure to tell investors that Potarazu failed to pay more than $7 million in payroll taxes from 2007 through 2016.
Potarazu also admitted he lied to investors and shareholders about a supposedly imminent sale of the company that would generate a profit. At one point he even had another person pretend to be the prospective buyer on a conference call.
"For years Potarazu enriched himself by abusing the trust of his company's many investors and stealing millions of dollars from them through a complex scheme of fraud and deceit," said Dana Boente, U.S. attorney for the Eastern District of Virginia, whose office prosecuted the case.
Potarazu has faced civil lawsuits related to his company for years, with multiple tax liens and civil judgments filed against him, according to court records.
Despite his connections to the Democratic Party, Potarazu also made numerous donations to Republicans, according to campaign-finance records compiled by the Center for Responsive Politics. Those records show donations to Marco Rubio and Mitt Romney as well as Hillary Clinton.
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