NC man arrested in Ponzi scheme defrauded people in the Indian community, FBI says

A former Chapel Hill transportation engineer was arrested Tuesday on 23 charges related to an investment scam otherwise known as a “Ponzi scheme,” according to the U.S. Department of Justice.

Kumar Arun Neppalli, 56, of Cary, is charged with 17 counts of wire fraud and six counts of conducting transactions in criminally derived property, according to a news release. He is expected to go to trial later this year and could face up to 20 years in prison if convicted.

Neppalli, who was hired in 2000 as Chapel Hill’s traffic engineer, abruptly resigned from his last job as the town’s traffic engineering manager on Nov. 1, 2021, after filing for Chapter 7 bankruptcy that October. A News & Observer investigation 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.

Four investors who spoke with The N&O said they knew Neppalli through state and national Indian cultural groups and that he touted his connections to developers through his work with the town in promoting his pending real estate deal with an unnamed local builder. In some cases, the money represented his investors’ life savings, court documents showed.

According to the release, Neppalli asked his investors to give him a specific amount of money quickly — sometimes within the same day — and promised to return the principal investment along with a profit within a few months. He asked some of his investors not to talk about the pending deal with other people or referred them to a nondisclosure agreement, the release said.

“Our investigation shows Neppalli abused the trust and confidence placed in him by fellow Indian-American community members,” said Michael C. Scherck, FBI 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,” Scherck said in the release.

The federal indictment released Tuesday accused Neppalli of using ”his good standing within the Indian-American community in Cary” to defraud at least 12 victims or sets of victims, the news release stated.

Neppalli used the money from his investors “to pay back earlier investors who believed that he was returning their original investment and legitimate capital gains,” the release said.

“We are committed to protecting the investing public from financial schemes,” U.S. Attorney Michael Easley said in the release. “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 FBI’s Triangle Fraud Taskforce is continuing to investigate, the release said.

The story will be updated.