Could a little bit of homework have stopped a $100 million scam? And what lessons does it hold for you when you are thinking about making an investment?
As dastardly as Deepal Wannakuwatte's fraud was, it basically boiled down to a single lie.
The Sri Lankan immigrant — who came to California and built a business importing and selling surgical gloves — conned investors, attorneys, banks and even a whole town by claiming to have lucrative contracts with the U.S. Department of Veterans Affairs.
"He indicated to investors that because of his unique position of being a minority-type business, he had access to government contracts upwards to $150 million per year," FBI Special Agent Paul Artley told CNBC's "American Greed."
Wannakuwatte did have a contract with the VA; that much was true. But it was worth a tiny fraction of what he claimed: just $25,000 per year. When the truth finally came out, 150 investors and lenders were left holding the multimillion-dollar bag.
In the little Northern California town of Olivehurst, where Wannakuwatte had purchased a shuttered plant to turn into a $30 million manufacturing facility, hopes for 175 badly needed jobs he promised were dashed. Wannakuwatte, 65, is serving a 20-year federal prison sentence for fraud and conspiracy.
As tragic as the losses may be, they are made even more so by the fact that there is a slim possibility Wannakuwatte could have been stopped by some of the very people he eventually conned. The story, told on the latest episode of"American Greed," is a cautionary tale to consider any time you are asked to put down money now in hopes of a payoff down the road.