SEC v. Viktor Gjonaj, No. LR-25018, Eastern District of Michigan (Jan. 28, 2021) — Press Release

SEC Charges Detroit-Area Businessperson with Fraud for Using Investor Funds to Play Michigan State Lottery Litigation Release No. 25018 / January 28, 2021 Securities and Exchange Commission v. Viktor Gjonaj, No. 21-civ-10199 (E.D. Mich. filed [January 28, 2011]) The Securities and Exchange Commission today charged Detroit-area businessperson Viktor Gjonaj for allegedly defrauding members of the Albanian-American community out of approximately $26.4 million, some of which he spent playing the Michigan State Lottery. According to the SEC's complaint, from at least mid-2016 to 2019, Gjonaj raised approximately $26.4 million through the fraudulent offer and sale of investment contracts to at least 24 investors, most of whom were members of the Albanian-American community in Detroit. As alleged, Gjonaj falsely represented to investors that their money would be used to purchase, develop, and sell real estate projects. Instead, Gjonaj allegedly used at least $10 million of the investors' funds to play the Michigan State Lottery, at times buying as much as $1 million worth of lottery tickets in a single week. Gjonaj also allegedly directed millions of dollars of investors' money to his personal checking account. As alleged, in order to maintain the fraud, Gjonaj repaid investors with lottery winnings, which Gjonaj falsely claimed were proceeds from real estate investments. According to the complaint, by August 2019, Gjonaj had lost all of his own and his investors' money, and owed the investors approximately $19 million. The SEC's complaint, filed in federal court in Detroit, charges Gjonaj with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks injunctive relief, disgorgement with pre-judgment interest, and civil penalties. Gjonaj consented to the entry of a judgment permanently enjoining him from violations of the charged provisions, with monetary relief to be determined by the court at a later date. The settlement is subject to court approval. In addition, the U.S. Attorney's Office for the Eastern District of Michigan filed criminal charges against Gjonaj on January 28, 2021 in a parallel action. The SEC's investigation was conducted by Marlene Key-Patterson, James O'Keefe, and Wilburn Saylor, Jr., and supervised by Steven Klawans in the Chicago Regional Office. The SEC's litigation is being led by Daniel Hayes. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Michigan and the Federal Bureau of Investigation. SEC Complaint

SEC Charges Detroit-Area Businessperson with Fraud for Using Investor Funds to Play Michigan State Lottery Litigation Release No. 25018 / January 28, 2021 Securities and Exchange Commission v. Viktor Gjonaj, No. 21-civ-10199 (E.D. Mich. filed [January 28, 2011]) The Securities and Exchange Commission today charged Detroit-area businessperson Viktor Gjonaj for allegedly defrauding members of the Albanian-American community out of approximately $26.4 million, some of which he spent playing the Michigan State Lottery. According to the SEC's complaint, from at least mid-2016 to 2019, Gjonaj raised approximately $26.4 million through the fraudulent offer and sale of investment contracts to at least 24 investors, most of whom were members of the Albanian-American community in Detroit. As alleged, Gjonaj falsely represented to investors that their money would be used to purchase, develop, and sell real estate projects. Instead, Gjonaj allegedly used at least $10 million of the investors' funds to play the Michigan State Lottery, at times buying as much as $1 million worth of lottery tickets in a single week. Gjonaj also allegedly directed millions of dollars of investors' money to his personal checking account. As alleged, in order to maintain the fraud, Gjonaj repaid investors with lottery winnings, which Gjonaj falsely claimed were proceeds from real estate investments. According to the complaint, by August 2019, Gjonaj had lost all of his own and his investors' money, and owed the investors approximately $19 million. The SEC's complaint, filed in federal court in Detroit, charges Gjonaj with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and seeks injunctive relief, disgorgement with pre-judgment interest, and civil penalties. Gjonaj consented to the entry of a judgment permanently enjoining him from violations of the charged provisions, with monetary relief to be determined by the court at a later date. The settlement is subject to court approval. In addition, the U.S. Attorney's Office for the Eastern District of Michigan filed criminal charges against Gjonaj on January 28, 2021 in a parallel action. The SEC's investigation was conducted by Marlene Key-Patterson, James O'Keefe, and Wilburn Saylor, Jr., and supervised by Steven Klawans in the Chicago Regional Office. The SEC's litigation is being led by Daniel Hayes. The SEC appreciates the assistance of the U.S. Attorney's Office for the Eastern District of Michigan and the Federal Bureau of Investigation. SEC Complaint