On January 28, 2021, the United States Securities and Exchange Commission (“SEC”), represented by Daniel J. Hayes, a lawyer with the SEC, filed a civil law enforcement action against Victor Gjonaj (“Gjonaj”) seeking injunction, disgorgement with interest and imposition of civil penalties for allegedly defrauding members of the Albanian-American community. This case was filed in U.S. District Courts in the Eastern District of Michigan with Judges David R. Grand and Paul D. Borman presiding.
In their complaint, the SEC alleged that Gjonaj engaged in fraudulent offer and sale of securities to at least 24 investors, who invested approximately $26.4 million from at least mid-2016 to 2019. As alleged by the SEC, Gjonaj falsely represented to investors that their money would be used to purchase, develop, and sell real estate projects. Instead, Gjonaj allegedly used the investors' funds to play the Michigan State Lottery.
The SEC alleged that “Gjonaj sold some of the investor’s “membership interests” in a particular limited liability company that Gjonaj created to purchase, develop, and resell real estate property. Some of these investments were made pursuant to written operating agreements entered into by the investor and Gjonaj under which they each acquired membership interests in a company in exchange for capital contributions.”
The SEC further alleged that “Gjonaj also sold investments pursuant to verbal agreements.” The allegation states that “Gjonaj told these investors that he would be a co-investor in the investments, would pool his money with the investors, and would use the investment funds to purchase, develop, and resell real estate properties for a profit.”
Gjonaj allegedly created Title Plus Title Service LLC, a sham real estate title company in which the investors were instructed to make out checks or wire funds. As alleged by the SEC, “Gjonaj deposited and pooled investor funds in an account in the name of Title Plus. Gjonaj then directed the money from the Title Plus account to his personal accounts, other Gjonaj entity accounts, or directly to the Lottery.”
According to the SEC, “between 2016 and 2019, Gjonaj won several lottery prizes totaling at least $25 million and used approximately $7.4 million to pay investors. By August 2019, Gjonaj owed the investors approximately $19 million and had lost all of his own and his investors’ money.”
There are two claims for relief laid down by the SEC. The first one is for the alleged violation of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] wherein allegedly Gjonaj knowingly employed one or more devices, schemes, or artifices to defraud and engaged in activities which would operate as a fraud or deceit upon the purchaser and he allegedly knowingly or negligently obtained money or property by means of one or more untrue statements of a material fact or omissions of a material fact. The second claim for relief states that Gjonaj allegedly acted with scienter in that he knowingly engaged in the alleged fraudulent conduct in violation of Section 10(b) of the Exchange Act [15 U.S.C. §78j(b)] and Rule 10b-5 thereunder [17 C.F.R. 240.10b-5].
In the prayer for relief, the SEC requested the court to pass an order finding that Gjonaj committed, and unless restrained, will continue to commit the violations alleged and thereby to pass an order for injunctive relief, disgorgement, plus prejudicial interest and civil penalties.
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Pending - Other Pending
Finance - Security/Commodity/Exchange
David R. Grand
Sean F. Cox
United States Securities and Exchange Commission
Daniel J. Hayes
Attorney at U.S. Securities & Exhange Commission
175 West Jackson Blvd, Ste 1450
Chicago, IL 60604
Docket(#3) ORDER RE: DISQUALIFICATION OF JUDGE AND REASSIGNING CASE from District Judge Paul D. Borman to District Judge Sean F. Cox. (NAhm) (Entered: 02/18/2021)[+] Read More [-] Read Less
Docket(#2) WAIVER OF SERVICE Returned Executed. Viktor Gjonaj waiver sent on 1/28/2021, answer due 3/29/2021. (Hayes, Daniel) (Entered: 01/29/2021)[+] Read More [-] Read Less
Docket(#1) COMPLAINT filed by United States Securities and Exchange Commission against Viktor Gjonaj with Jury Demand. No summons requested. No Fee Required - US Government. County of 1st Plaintiff: usa - County Where Action Arose: Macomb - County of 1st Defendant: Macomb. [Previously dismissed case: No] [Possible companion case(s): Eastern District of Michigan, 2:21-cr-20050-LVP-RSW, Judge Linda V. Parker] (Hayes, Daniel) (Entered: 01/28/2021)[+] Read More [-] Read Less
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