SEC Charges Real Estate CEO With Defrauding Investors
Michael Shustek defrauded investors by siphoning $29 million from REITs to benefit his own entity and was charged by the SEC.
The SEC charged Michael Shustek, CEO of several Las Vegas REITs and Vestin Mortgage LLC, with securities fraud, alleging he drained $29 million from Vestin Realty Mortgage I (VRTA) and II (VRTB) to benefit The Parking REIT. He is accused of deceiving the boards of VRTA and VRTB, violating fiduciary duties, and making false public filings. The SEC seeks disgorgement, penalties, and permanent bars against Shustek for violations of the Securities Act, Exchange Act, and Advisers Act.
The Securities and Exchange Commission (SEC) has filed securities fraud charges against Michael Shustek, CEO of several Las Vegas real estate investment trusts (REITs), and his firm, Vestin Mortgage LLC. The complaint alleges that since at least 2012, Shustek orchestrated a scheme to drain $29 million from two publicly traded REITs, Vestin Realty Mortgage I (VRTA) and Vestin Realty Mortgage II (VRTB), to benefit his own entity, The Parking REIT. This was done through self-dealing transactions, including repeatedly re-selling the same six buildings in money-losing deals. Shustek is also accused of deceiving the boards of directors of VRTA and VRTB, violating his fiduciary duties, and causing the companies to pay him nearly $10 million. Additionally, he is alleged to have misled investors by making false and misleading statements in public filings to conceal his misconduct. The SEC's complaint, filed in the District of Nevada, charges Shustek and Vestin Mortgage with violating the antifraud provisions of the Securities Act, Exchange Act, and Advisers Act. The agency is seeking disgorgement of ill-gotten gains, pre-judgment interest, penalties, permanent injunctions, and industry, penny stock, and officer and director bars against Shustek. The investigation was conducted by the SEC's San Francisco Regional Office, with the litigation being handled by its staff there.
Exhibits & Attached Documents (2)
Extracted insights
- $29.00M $29 million $10M–$100M
- $10.00M $10 million $10M–$100M
- person erin e. schneider
- person fiduciary duties
- agency Financial Industry Regulatory Authority
- person jeremy pendrey
- person michael shustek
- person monique c. winkler
- person ruth hawley
- agency Securities and Exchange Commission
- scheme_term securities fraud charges
- company vestin mortgage llc
- Securities and Exchange Commission announced securities fraud charges
- Securities and Exchange Commission charged Michael Shustek
- Securities and Exchange Commission charged Vestin Mortgage LLC
- Michael Shustek fraudulently enriched himself
- Michael Shustek drained $29 million
- Michael Shustek directed VRTA and VRTB
- Michael Shustek deceived boards of directors
- Michael Shustek violated fiduciary duties
- Michael Shustek misled investors
- VRTA and VRTB made false and misleading statements
- Erin E. Schneider said REIT executives have a responsibility
- SEC filed complaint
- SEC seeks disgorgement
- SEC seeks penalties
- Ruth Hawley conducted investigation
- Jeremy Pendrey supervised investigation
- Monique C. Winkler supervised investigation
- Financial Industry Regulatory Authority provided assistance
The Securities and Exchange Commission today announced securities fraud charges against recidivist Michael Shustek, the CEO of several Las Vegas real estate investment trusts (REITs), and his wholly owned investment advisory firm, Vestin Mortgage LLC. The complaint alleges that since at least 2012, Shustek fraudulently enriched himself and one of the REITs he controlled, The Parking REIT, at the expense of two publicly traded REITs that he earlier had founded, Vestin Realty Mortgage I (VRTA) and Vestin Realty Mortgage II (VRTB). According to the complaint, Shustek drained $29 million from VRTA and VRTB in order to funnel the money into The Parking REIT and later directed VRTA and VRTB to enter into a series of money-losing transactions in which the same six buildings were repeatedly re-sold, all to benefit himself and The Parking REIT. The complaint also alleges that Shustek deceived the boards of directors of VRTA and VRTB—and violated his fiduciary duties to those companies—in two separate securities transactions to get the companies to pay him almost $10 million. Finally, the complaint alleges that Shustek repeatedly misled investors by causing VRTA and VRTB to make false and misleading statements in their public filings, which hid his self-dealing. "REIT executives have a responsibility to be forthright with investors about how their money is being spent," said Erin E. Schneider, Director of the SEC's San Francisco Regional Office. "As we allege in our complaint, Shustek deceived the REITs' boards of directors and shareholders to hide his repeated misuse of their assets to benefit himself." The SEC's complaint, which was filed in the District of Nevada, charges Shustek and Vestin Mortgage with violating the antifraud provisions of the Securities Act, Exchange Act, and Advisers Act, and seeks disgorgement plus pre-judgment interest, penalties, permanent injunctions, and industry, penny stock, and officer and director bars against Shustek. The SEC’s investigation was conducted by Ruth Hawley and supervised by Jeremy Pendrey and Monique C. Winkler, and the litigation will be conducted by Ms. Hawley, Marc Katz, and David Zhou, and supervised by Susan LaMarca, all of the San Francisco Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.
The Securities and Exchange Commission today announced securities fraud charges against recidivist Michael Shustek, the CEO of several Las Vegas real estate investment trusts (REITs), and his wholly owned investment advisory firm, Vestin Mortgage LLC. The complaint alleges that since at least 2012, Shustek fraudulently enriched himself and one of the REITs he controlled, The Parking REIT, at the expense of two publicly traded REITs that he earlier had founded, Vestin Realty Mortgage I (VRTA) and Vestin Realty Mortgage II (VRTB). According to the complaint, Shustek drained $29 million from VRTA and VRTB in order to funnel the money into The Parking REIT and later directed VRTA and VRTB to enter into a series of money-losing transactions in which the same six buildings were repeatedly re-sold, all to benefit himself and The Parking REIT. The complaint also alleges that Shustek deceived the boards of directors of VRTA and VRTB—and violated his fiduciary duties to those companies—in two separate securities transactions to get the companies to pay him almost $10 million. Finally, the complaint alleges that Shustek repeatedly misled investors by causing VRTA and VRTB to make false and misleading statements in their public filings, which hid his self-dealing. "REIT executives have a responsibility to be forthright with investors about how their money is being spent," said Erin E. Schneider, Director of the SEC's San Francisco Regional Office. "As we allege in our complaint, Shustek deceived the REITs' boards of directors and shareholders to hide his repeated misuse of their assets to benefit himself." The SEC's complaint, which was filed in the District of Nevada, charges Shustek and Vestin Mortgage with violating the antifraud provisions of the Securities Act, Exchange Act, and Advisers Act, and seeks disgorgement plus pre-judgment interest, penalties, permanent injunctions, and industry, penny stock, and officer and director bars against Shustek. The SEC’s investigation was conducted by Ruth Hawley and supervised by Jeremy Pendrey and Monique C. Winkler, and the litigation will be conducted by Ms. Hawley, Marc Katz, and David Zhou, and supervised by Susan LaMarca, all of the San Francisco Regional Office. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.