Sreedhar Potarazu, an ophthalmologist and entrepreneur, was reportedly arrested last month and charged with using his company to orchestrate a $30 million investment fraud scheme. Potarazu, of Potomac, MD, who has emerged as a major political donor of late, was arrested Oct. 6. The scheme, however, does not directly link back to his political donations.
Federal prosecutors in Alexandria say Potarazu convinced people to invest millions in his former company, VitalSpring Technologies, by hiding his tax liabilities and lying about the company’s finances.
An FBI affidavit explained that Potarazu, now the president and chief executive at software company Enziime, raised $30.5 million from more than 160 investors between 2011 and 2015, with one shareholder investing about $16 million, including a $344,000 payment as recently as August.
VitalSpring, which, according to Potarazu’s LinkedIn page, he owned from 2000 until July 2015, provided technology to companies as a means to help them analyze and control their healthcare costs. However, the affidavit noted that the company failed to pay $6 million in employment taxes from 2007 to 2015, and Potarazu never informed investors of the liability.
Additionally, it alleges Potarazu falsely told investors that a sale of the company was imminent, and would provide a profit to investors, when no such sale was in the works. According to the affidavit, Potarazu pulled $900,000 from the company for personal expenses, even as tax returns showed the company lost $31 million between 2007 and 2013.