What happened?

Ramaraj owned DAB Inspection and Consulting Services LLC (DAB), based in Sterling, Virginia, and primarily performed residential deck and patio renovations and other small construction work, according to the criminal complaint filed by the U.S. Department of Justice. .

However, federal prosecutors claimed he used his small business to operate an investment scheme. He told existing and potential investors “that DAB had lucrative contracts with the Federal Aviation Administration, the Virginia Department of Transportation (VDOT) and others, and was a joint venture partner in a Washington DC Water Clean Rivers Project.” , for dozens of years. million dollars each, supposedly to perform engineering inspection work on huge infrastructure projects,” according to a release of the United States Attorney’s Office for the Eastern District of Virginia.

Court documents claim that over a four-year period, from January 2020 until his arrest in May 2024, Ramaraj told people, including members of his Loudon County cricket league, that he needed to make large bonus payments. in advance to secure work on these government contracts. , but was unable to obtain bank financing due to the “relative youth of DAB as a company.”

It also offered investors the opportunity to lend DAB money at high interest rates, annualized to 30% or more, according to court documents.

As part of Ramaraj’s scheme, federal prosecutors alleged he provided falsified contract award letters, invoices, financial records and other documents to induce dozens of investors in at least five states, including Virginia, Maryland, North Carolina, New Jersey and Missouri, to lend funds. which, according to him, would be bundled into bonus payments associated with the alleged government contracts. However, the supposed bails were never paid.

“Using money from subsequent investors, Ramaraj paid the initial investors the promised returns to entice them to continue investing and recruit other friends and family to invest,” the US attorney’s office said in a statement. “Instead of paying the promised bonuses, Ramaraj electronically transferred investor funds to his online brokerage accounts to conduct securities transactions; transferred more than $1 million to accounts in India; bought several cars, including several Teslas; real estate obtained; He incurred millions in losses in the stock market and made other payments to finance his lifestyle. Ramaraj received almost $40 million and caused investors losses of approximately $15 million.”

Court documents state that Ramaraj was confronted by two investors and signed an acknowledgment in October 2023 that he had altered numerous contracts and financial records and that he “continued to make material misrepresentations about DAB to other investors and potential investors.”

Prosecutors alleged that Ramaraj maintained a website that exaggerated DAB’s projects and work history. He also provided a slide deck to investors misrepresenting the company’s current projects and claimed that he submitted millions of dollars in bonds for supposed projects for VDOT, the FAA and other entities.

According to court documents, Ramaraj was pitching investors until his arrest on May 30. He had remained in custody as a flight risk since then.

In June, a federal grand jury indicted Ramaraj on 22 counts of wire fraud and six counts of money laundering. However, as part of his plea agreement, the court dismissed the remaining 26 charges.

SEC files civil complaint

On Tuesday, the clerk of the U.S. District Court in Alexandria entered a default judgment against Ramaraj after he failed to enter a timely plea and respond to a civil lawsuit filed against him in July by the Securities and Exchange Commission. The complaint was filed after Ramaraj had already pleaded guilty to two charges, including wire fraud and money laundering, in the Justice Department’s criminal case.

Earlier Tuesday, the SEC filed a default judgment motion with the court, four days after Ramaraj was sentenced in the Justice Department case.

The motion states that Ramaraj did not respond to the summons and complaint by Sept. 5, after being served on Aug. 14, while in custody at the Alexandria Adult Detention Center. The motion also alleges that Ramaraj did not attempt to hire an attorney to appear on his behalf in the civil action.

According to the SEC complaint, Ramaraj conducted a fraudulent offering through his company, DAB, and raised around $31 million from more than 70 investors through the offer and sale of notes.

“Ramaraj promised exorbitant rates of return and told potential investors that he would use their funds to fund the sureties and performance bonds needed to ensure DAB’s performance in quality assurance services for multi-billion dollar government-sponsored infrastructure projects.” , the SEC states in court. filings.

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