Cary man sentenced for using Chapel Hill town job to bilk millions from Indian-Americans
A former Chapel Hill transportation engineer was sentenced to nearly four years in prison and was ordered to pay almost $1 million to his victims Tuesday after pleading guilty in federal court to a Ponzi investment-fraud scheme.
Kumar Arun Neppalli, 57, pleaded guilty in September to 17 counts of wire fraud, committed between December 2017 and May 2021, according to court documents. He resigned from his traffic planning job with the town of Chapel Hill in November 2021, after filing for Chapter 7 bankruptcy.
“Neppalli was a conman running a classic ‘affinity fraud,’ targeting Indian-American investors in the Triangle for their hard-earned savings,” U.S. Attorney Michael Easley said. “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.”
Neppalli had worked for the town since 2000 and was a widely regarded member of the Triangle’s Indian American community, previously serving as vice president and president of the Triangle Area Telugu Association, and as a former board member with the Hindu Society of North Carolina. He also served for 11 years as president of his Twin Lakes Master Association in Cary.
Federal investigators said Neppalli, who lived in Cary, used his position in the community to defraud his victims, telling them that he had connections to real estate developers in the Orange County area through his job with the town and that he would invest their money in real estate projects.
A News & Observer investigation in 2021 revealed that Neppalli, a native of India, was accused of bilking 15 investors out of $1.9 million in business loans that he acquired through his connections with the Triangle’s Indian community.
Federal investigators said Neppalli would ask interested investors to provide money in a short amount of time, sometimes on the same day, to help close the transaction, according to a news release.
Neppalli promised to return their principal investment plus a profit within a few months, and often asked his victims not to discuss the transaction with other members of the Indian American community, they said, sometimes mentioning a non-disclosure agreement.
He used money from subsequent victims to repay earlier investors, investigators said.
A town spokesman told The N&O that Chapel Hill staff investigated Neppalli’s work but did not find any irregularities. Neppalli told the court that he did not profit from the transactions, which he described as investments and loans, according to court transcripts.
Bankruptcy documents filed in October 2021 with the U.S. District Court showed Neppalli owed nearly $2.5 million, including over $600,000 in debts with financial lenders, credit card providers and the Internal Revenue Service. He also claimed $2 million in assets, including homes in Cary and Apex that are still under a mortgage.
Neppalli’s earnings before retirement equaled roughly $14,000 a month, including rental income, court documents showed. His monthly bills were over $9,400, and he had less than $1,000 in various financial accounts.
Neppalli’s bankruptcy case is still pending in federal court. Four investors who spoke with The N&O said they knew Neppalli through mutual friends or state and national Indian cultural groups.
The investors told The N&O that Neppalli touted his work-related development connections in promoting pending real estate deal with an unnamed local builder.
“Neppalli swindled members of his own tight-knit community,” the state’s FBI Special Agent in Charge Robert DeWitt said. “He pretended to have inside information to make them rich, instead many victims lost their entire life savings.”
NC Reality Check is an N&O series holding those in power accountable and shining a light on public issues that affect the Triangle or North Carolina. Have a suggestion for a future story? Email realitycheck@newsobserver.com
This story was originally published January 24, 2024 at 11:49 AM.
