Sreedhar Potarazu was brilliant, everyone agrees, an ophthalmic surgeon who started college at age 15 and earned degrees in medicine and business.
The doctor from Potomac, Md., told friends and colleagues that he was using those talents to develop innovative software that would curb health-care costs. If they invested, they could help solve a major national problem and make some money along the way.
In fact, he was entangling his investors in a multimillion-dollar scam. Potarazu was sentenced Wednesday in federal court in Alexandria to 10 years in prison for shareholder and tax fraud.
“Our lives will never be the same,” said Anjali Mathur, a physician and one of the investors, at a hearing this year. “To me, he’s the Bernie Madoff of the Washington metro area.”
From 2008 until his arrest in October 2016, Potarazu persuaded 174 investors to put a total of more than $49 million into a company called VitalSpring. He repeatedly told them that the company would soon be sold and their money returned many times over.
To back up his claims, he fabricated tax returns, business contracts, balance sheets and even an entire bank website. He persuaded one shareholder to increase her investment by claiming that a key backer had died in the 2013 Navy Yard attack. And he once had an impostor play the general counsel for a Fortune 500 company on a conference call. When under pressure from shareholders and investigators, he faked a letter from a doctor stating that he had testicular cancer, according to prosecutors.
In his defense, Potarazu argued that VitalSpring was a legitimate enterprise with real clients and some revenue, and that the vast majority of investment funds did go into the company. He said he lied to investors and failed to pay taxes only to buy time while trying to find a buyer or major contract.
“I took an oath to do no harm, and yet I did,” he said at sentencing.
Prosecutors presented testimony that the software produced by VitalSpring had little value.
At a hearing in May, victims testified that they had lost savings they needed for retirement or to care for children and sick relatives. They had believed Potarazu in part because, like many of them, he was a doctor.
Potarazu also treated the victims like family members and assured them he would encourage his wife or daughter to make the same investments. Now, several said, their own family members do not trust them. The fallout from the case includes divorces and lost homes.
“He would touch my wife’s feet every time he met her as a sign of respect,” recalled Vijay Varma, a doctor who said he lost millions of dollars to Potarazu. “He treated her as his own mother. . . . I trusted Sreedhar like a family member, and he threw my trust in my face.”
Girish Jindia lamented that he had encouraged “young people with families” who work at his government contracting firm in Arlington to invest their savings in VitalSpring.
“I see them every day, and they say, ‘What did you get us into?’ ” Jindia testified. “I have to live with that the rest of my life.”
When lies did not work, Potarazu turned vicious. He threatened balking shareholders with death and smeared them online as pedophiles and perverts, they said in court. He fabricated emails making them appear mentally unstable.
Jeff Waters, an investor, said at a court hearing in May that when he began investigating Potarazu’s financial claims, other shareholders received an email that directed them to a website claiming that Waters was being sought by D.C. police for molesting small boys.
“This man is a monster,” Waters testified. “I still worry, when he is free, that I am not a safe person.”
Potarazu used the money he took out of VitalSpring to position himself as a “thought leader” and “inside the Beltway power player,” prosecutor Caryn Finley said at sentencing. He spent hundreds of thousands of dollars writing a book and getting himself booked for interviews on Fox Business. He donated heavily to the Democratic National Committee. (He has requested, through counsel, that the $330,000 he donated be returned and used to repay investors). He sponsored Indian dance performances at the Kennedy Center.
Potarazu launched VitalSpring in 1999, and several investors from the Netherlands put about $20 million into its early development. U.S. District Judge Gerald Bruce Lee concluded that everyone who invested after 2008 — when VitalSpring was already on the verge of bankruptcy — did so only because they had been told lies. The company declared bankruptcy last month.
“To cheat your own friends and even your mentors, my goodness,” Lee said before imposing the sentence. “It must have been ego; it must have been greed.”
An earlier version of this article incorrectly attributed testimony from one of the victims in the case. The statements were made by Jeff Waters not by Ken Logue.