SEC v. Michael V. Shustek; and Vestin Mortgage LLC, No. 2:21-cv-01416, District of Nevada (July 30, 2021) — Complaint

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ERIN E. SCHNEIDER (Cal. Bar No. 216114)
  [email protected]
MONIQUE C. WINKLER (Cal. Bar No. 213031)
  winkle r [email protected]
JEREMY E. P ENDREY (Cal. Bar No. 187075)
  [email protected]
MARC D. KATZ (Cal. Bar No. 189534)
  k  [email protected]
DAVID ZHOU (NY Bar No. 4926523)
  [email protected]
RUTH L. HAWLEY (Cal. Bar No. 253112)
  [email protected]
Attorneys for P laintiff
SECURITIES AND EXCHANGE COMMISSION
44 Montgomery  Street, Suite  2800
San Francisco,  California   94104
Telephone:   (415) 705-2500
Facsimile:   (415) 705-2501
SECURITIES AND EXCHANGE COMMISSION,
P la intif f ,
v.
MICHAEL V. SHUSTEK and VESTIN
MORTGAGE  LLC,
Defendants.
Case No.
COMPLAINT
JURY TRIAL DEMANDED
P la intif f    Se c ur itie s    a nd  Exchange  Commission   (the “SEC”) alleges:
SUMMARY
1.Since at least 2012, M ichae l Shus te k orchestrated a series of varied  and  complex
fraudulent  schemes that shared one common  theme: He devised ways to enrich himself  at the
expense of those who invested  in entities  that he ran. As the CEO and day-to-day  operator,  Shustek
exerted control  over the two real estate investment  trusts that bore the brunt of his misconduct,
Ve s tin Re alty Mortgage  I (“VRTA”) and Ve s tin Re alty Mortgage  II (“VRTB”). In many  of
UNITED STATES DISTRICT COURT
DIS
TRICT OF NEVADA

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these misdeeds,  Shustek acted in concert with another  Shustek-owned-and-controlled   entity,
defendant Ve s tin Mortgage  LLC (the  “ Ve stin Adviser”), which acted as the investment  adviser
to, and manager of, VRTA and VRTB.
2. In one brazen plot,  Shustek drained  $29 million  from VRTA and VRTB, and then
funneled  the money  into  his newer venture called The P arking REIT. In another maneuver,  Shustek
arranged for VRTA and VRTB enter into  a complicated  string  of money-losing   transactions  in
which  the  same  six  buildings   were  repeatedly  re-sold for his   and The P arking  REIT’s benefit.  In a
variation   on  the  theme,  Shustek  also  deceived  the  boards  of  directors  of  VRTA  and  VRTB—and
violated  his fiduciary  duties  to the entities—in  two separate securities  transactions,  to get the
companies  to  pay  him  almost  $10  million.   And  Shustek  repeatedly misled  investors  by causing
VRTA and VRTB to make false and misleading  statements   in  public    s e c ur itie s   f ilings—pr ima rily
to disguise  Shustek’s own s e lf-d e a ling.
3. This  Complaint   seeks  to  hold   Shustek  accountable  for  his   near-decade-long
wrongdoing,   which  began  less than  six years after the SEC previously  found  that he had violated
the securities laws. Specifically,  the SEC seeks an order enjoining  Shustek and the Vestin Adviser
from further violations  of the federal securities laws; prohibit ing  Shustek  from serving  as an officer
or director  of any public  company; imposing  a penny  stock bar against Shustek;  and requiring  the
Defendants to pay civil  monetary  penalties,  and to disgorge  their ill-gotten  gains or unjust
enrichment  with  prejudgment  interest  thereon.
JURISDICTION AND VENUE
4. The SEC brings  this action pursuant  to Sections  20(b) and 20(d)  of the Securities
Act of  1933  (“Securities   Act”)  [15  U.S.C.  §  77t(b),  (d)],  Sections  21(d)  and  21(e)  of  the  Securities
Exchange  Act of  1934  (“Exchange  Act”) [15  U.S.C. 78u(d),  (e)], and Section  209(d)  of  the
Investment Advisers Act of 1940  (“Advisers  Act”) [15 U.S.C. § 80b-9(d)].
5. The  Court  has  jurisdiction   over  this  action,  and  venue  lies  in  this  District,   pursuant  to
Sections  20(b),  20(d),  and  22(a)  of  the  Securities  Act  [15  U.S.C.  §§  77t(b),  77t(d),  77v(a)],  Sections
21(d),  21(e),  and  27  of  the  Exchange  Act  [15  U.S.C.  §§  78u(d),  78u(e),  and  78aa],  and  28  U.S.C.  §

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1391,  and Sections  209(d),   209(e),  and  214  of  the  Advisers  Act  [15  U.S.C.  §§  80b-9(d),  80b-9(e),
80b-14].
6. Defendants,  directly  or  indirectly,  made use of the means and instrumentalit ies  of
interstate commerce or of the mails  in connection  with the acts, transactions,  practices, and courses
of  business  alleged  in  this  complaint.  Certain transactions, acts, practices and courses of business
that form the basis for the violations  alleged  in  this Complaint  occurred within Clark  County,
Nevada.
DEFENDANTS
7. M ichae l V. Shus te k is 62 years old  and resides in Las Vegas, Nevada. He founded
defendant  Vestin  Mortgage  LLC,  as well  as several companies  that invested in real estate-related
assets and whose securities  were sold to the public. In a 2006  Order, the SEC found  that Shustek
and two companies  he controlled  violated  Sections  17(a)(2) and (3) of the Securities Act,  and
ordered  Shustek,  among  other  things, to  cease and desist from further violations.
8. On December 9,  2019,  Shustek entered into  an agreement with  the SEC,  which
provides  that  the  running   of  any  statute  of  limitations   applicable   to  an  action  against  Shustek  by  the
SEC,  including   any  sanctions  or  relief  that  might   be  imposed,   is  tolled   for  the  period  beginning   on
December 9,  2019  through  March 9,  2020.
9. Ve s tin Mortgage  LLC is a Nevada limited  liability   company  with  its  principal
place of business in  Las Vegas, Nevada. It  is  solely   owned  and  controlled   by  Shustek,  and  is  the
manager of,  and  investment adviser  to,  VRTA and VRTB. It has no officers or employees  other
than  Shustek.
FACTUAL ALLEGATIONS
A. Shus te k Controlle d the  Entitie s Involved In the  M is conduct.
10. Shustek controlled  and operated an entire ecosystem of companies  in  which  some
businesses  provided  advice  about  investments,   and  others  made the investments.  One of  his
investment  advisory  companies  was  the  Vestin  Adviser.  Together,  Shustek  and  the Vestin Adviser
controlled  and advised  VRTA and VRTB, which w e r e  public ly-traded,  real  estate investment  trusts,
or “REITs.” In general, REITs are companies  that own income-producing   real estate or real estate-

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related assets and distribute the majority  of their  income  to the ir  investors  through  dividends.
According  to  their  public  filings,   VRTA  and  VRTB  generally invested  in  real estate mortgage  loans
and real property.
11. Per written agreements, Defendants Shustek and the Vestin Adviser  were at all
relevant times the managers  to VRTA and VRTB. In addition,  Shustek  was the CEO, sole owner
and only  officer and employee  of the Vestin Adviser.  In practice, that meant Shustek hims e lf  made
the investment  decisions  for VRTA and VRTB, and,  for at least the last decade, he invested
significant  amounts  of their  assets into  securities.  During  the seven-year period  between 2011  and
2018, securities comprised more  than  20%  of  VRTA’s assets for six of the years, and more than
20% of VRTB’s assets for four of the years. Since  2018,  more than half of both  companies’  assets
have been securities.  Shustek  and  the  Vestin  Adviser  received  fees  and  other  compensation   for the
advice  they  provided   regarding  securities  investments.
12. As the CEO of VRTA and VRTB,  Shustek approved and signed  public  filings  made
by VRTA and  VRTB. From  2006  to  2015,  VRTA  filed  public  reports with the SEC and traded its
securities on the Nasdaq Global  Select Market (“Nasdaq”). VRTB, which  also traded its securities
on the Nasdaq, filed  public  reports  with  the SEC from  2006 until  2017.
13. After  2015  and  2017,  respectively,   the  securities  of  VRTA  and  VRTB  went from
being  traded on the Nasdaq to being traded on the over-the-counter  (“OTC”) market. Securities
trade OTC because they do not meet the financial  or listing  requirements  to list  on a formal  market
exchange like  the Nasdaq. Generally,  they are low-priced   and  thinly   traded  and are traded via a
broker-dealer  network instead  of a centralized  exchange. But VRTA and VRTB continued  to
publish annual  and quarterly  reports to the public  about their  businesses  and  financial  condition.
Those filings, many of which  were  approved  and  signed  by  Shustek,  were  publicly posted  on
otcmarkets.com,  and linked  to on VRTA’s and  VRTB’s websites.
14. This  “Vestin”  group  of  businesses  was  just  one  part  of  Shustek’s  corporate  stable.
He also  controlled  and ran a Nevada company called MVP Re alty Advis ors , LLC (“Shus tek
Parking Advis e rs ”), which was jointly  owned by VRTA and VRTB and operated  as an investment
adviser.  Shustek  and  Shustek  P arking  Advisers,  in  turn,  controlled   and  advised  a  private  Maryland

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corporation  c a lle d  The  Parking REIT, which  has  its  principal   place  of  business  in  Las  Vegas  and
pr ima r ily   inve s ts   in  pa r king   f a c ilitie s .
15. Although VRTA and VRTB and The P arking REIT w e r e  le ga lly  dis tinc t  e ntitie s
with  different  shareholders,  Shustek  used his  near-total  control  over all  of  the  companies  to
repeatedly raid  the assets of VRTA and VRTB to  benefit  The P arking REIT and to collect  millions
of dollars  for himself  along  the way. As  described  in  detail  below,  Shustek  caused VRTA and
VRTB to transfer away tens of millions  of dollars  and to lose money on real estate deals to benefit
The P arking REIT.  To  conceal  his  fraudulent  actions  from  VRTA’s and  VRTB’s shareholders,
Shustek signed  off on dozens  of false and misleading  SEC and OTC filings  for those two
companies,  and he a lso  made  misrepresentations   to  their  respective  boards  of  directors.

B. Shus te k Directed VRTA and  VRTB to Transfer  Almost $30 Million to Be nefit The
Parking REIT.
16. As part of his scheme to use VRTA and VRTB—companies  with  both  retail  and
ins titutio nal  investors—as  piggy  banks for The P arking REIT,  Shustek  and  the  Vestin  Adviser
caused the two investment companies  to  give  up  more  than  $29  million   between  2012  and  2017.
That money  went to Shustek P arking  Advisers  and another Shustek-controlled intermedia r y
company, both  of  w hic h  (at Shustek’s  direction)  used the funds to pay the   bills    of The P arking
REIT.
17. VRTA and VRTB received little   in  return  for  giving   away  nearly  $30  million   of
their  cash.  Neither  company  had  a  significant   prior  ownership  interest  in     The P arking  REIT,  and
neither received any equity  interest in  that business  in exchange for the funds. Despite the amount
of money  involved  and the complexity  of the payment  trails,  Shustek disregarded  even the most
basic elements of legitimate,  arms-l ength  transactions:  There were no written contracts governing
the transfers of money between VRTA/VRTB and the Shustek-intermediary   companies,  nor  any
written agreements between VRTA/VRTB and The P arking  REIT. Shustek  also  provided no
written cap on the amount  of  money  that  could   be  transferred from VRTA or VRTB, and omitted
any fixed  repayment schedule or interest rate for the $29 million.  Not surprisingly,  VRTA and
VRTB were never fully  repaid.

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18. The money  drain hobbled  VRTA and VRTB in  conducting  the  businesses  they  told
investors  they were engaged  in—investing  in mortgage loans  and real property. In agreements
publicly   filed  with  the  SEC,  the  Vestin Adviser  pledged  to protect “[VRTA’s and VRTB’s]
investments  consistent  with  [their] basic investment  objectives.”  Those agreements also  prohibited
the Vestin Adviser from  making   “it  impossible   to  carry  on  the  ordinary   business  of”  VRTA  and
VRTB, or “possess[ing] [VRTA or VRTB] property  or  assign[ing]   the  rights  of  [VRTA or VRTB]
in property  for other than a [VRTA or  VRTB] purpose.”  But  those  promises  did  not  stop
Defendants from directing  VRTA and VRTB to pour the ir  cash into  transactions  that bore no
resemblance to their “basic investment objectives.”
19. Shustek hid  this  scheme from the public  and investors. Throughout  the years that he
was using VRTA’s and VRTB’s money to benefit The P arking  REIT, Shustek  knowingly  or
recklessly directed VRTA and  VRTB to publish false and misleading  statements about  these
companies  and these transactions in  the ir   public    f ilings.  In particular,  Shustek approved numerous
filings  that falsely  described the money  siphoned  out of VRTA and VRTB as “loans”  in  spite  of  the
defects described  in  paragraph  17. Furthermore, many  public  filings  misrepresented  that almost all
of VRTA’s and VRTB’s funds  went to real estate investments  and mortgage loans  when, in reality,
Shustek  was using that money for his   newer enterprise. Shustek personally  signed about  two  dozen
reports f ile d   w ith  the   SEC containing   this  misinformation,   including:
• Two annual  reports  (Form  10-Ks) and s ix  quarterly  reports (Form 10-Qs) for VRTA, f ile d
between 03/31/2014 and 11/16/2015;
• Three annual  reports  (Form  10-Ks)  and  ten quarterly  reports  (Form  10-Qs) for VRTB, f ile d
between 11/14/2013 and 11/10/2016;  and
• “D e f initive   P roxy  Statements”  (Form  DEF  14A)  for  VRTA and VRTB, f ile d  on  10/26/2015
and 01/17/2017.
(See Appendix  A.)
20. Shustek continued   to  knowingly   or  recklessly  direct  VRTA and VRTB to  publish
false and misleading  statements about  the  $29  million   payment  scheme after the switch  from
trading  on the Nasdaq to trading  OTC. Shustek signed  approximately  18 OTC reports that

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contained the same type of misinformation  included  in  the SEC filings:  twelve  VRTA OTC
quarterly  and annual  reports filed  between 04/11/2016 and 04/16/2019; and  six VRTB OTC
quarterly  and annual  reports filed  between 12/06/2017 and 04/16/2019.  (See Appendix  A.)
21. Shustek’s and Vestin Mortgage’s use of VRTA and VRTB’s assets to fund The
P arking  REIT a ls o  breached the fiduciary  duties  that they owed as investment  advisers  to  VRTA
and VRTB.

C. Shus te k Arrang e d fo r Re pe ated Re-Sales of the  Same  B uildings  Between Affiliate d
Companie s, Re s ulting in Significant  Los s es for VRTA and VRTB, and  M ade
M is le ading State me nts About the  Trans actions in Public  Filings  and  to VRTA’s  and
VRTB’s  B o ards  o f Dire cto rs.
22. Shustek  also  diverted money  from  VRTA  and  VRTB through  repeated sets of  sales
of the same commercial  buildings,  so that Shustek could  fund  The P arking REIT and  benefit
hims e lf .   From  2013  through   2017,  Shustek  directed that the same six Las Vegas office buildings
change hands multiple  times between VRTA/VRTB, The P arking  REIT,  and  Shustek’s  longtime
business  partner’s companies.  Shustek structured the transactions  so that VRTA and VRTB lost
money  on these transactions   w hile  everyone else – including   himself   – profited  at their expense.
Indeed,  The P arking  REIT made money  on the  sales, the business  partner’s company got  millio ns
of dollars  in loans  forgiven,  and Shustek  pocketed more than $1.75 millio n  in  fees and
commissions.
23. The buildings  were constructed in  about 2007  by the business partner with  the help
of a substantial  loan from VRTA and VRTB. In 2013,  Shustek  arranged for The P arking REIT  to
purchase the buildings  from  his  business  partner’s  company in  order to expand its portfolio  of
assets and thus  make The P arking  REIT more attractive to investors.  As part of the payment,
Shustek caused VRTB to forgive  the approximately  $10 million  that his business  partner’s
company still  owed on the original  construction  loan and VRTB got nothing  in return.
24. A year later,  in  2014, Shustek again  arranged for a swap of assets that benefited The
P arking  REIT,  but not  VRTA or VRTB. This  time,  he  caused  The  P arking  REIT to  s e ll   the
buildings to VRTA and VRTB,  which  together  paid  The P arking  REIT approximately $1.4  million
in cash as well  as ownership  stakes in a number  of other  properties  valued  at  $53.6  million—even

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though  VRTA and VRTB had no reason for buying  the buildings  other than to help The P arking
REIT.
25. The  property  churn  continued  in  2016 and 2017. In 2016, Shustek  had VRTA and
VRTB sell the buildings  back to  another  of  his  business  partner’s  companies at a loss of
approximately   $9  million.  While  VRTA and VRTB retained  the right  to buy  back the buildings  in a
year, Shustek soon directed  them  to  sell  that  repurchase  right  to  a  different  entity  controlled   by  his
business  partner,  thereby cementing his business partner’s ownership  of the buildings.  In  exchange,
VRTA and VRTB received some stock in The P arking REIT (which was difficult  to value or
monetize,  since  The P arking  REIT was not  publicly   traded), along   with  less  than  $900,000   in  cash.
To make matters worse, VRTA and VRTB had to pay Shustek approximately  $1.65  million   in
commissions  for setting  up these money-los in g  transactions.
26. To obtain  this $1.65  million   commission,   Shustek  lied to  VRTA’s and VRTB’s
respective boards of directors  by declaring  that  he was “entitled  to a 3% commission.”  But these
sales did  not qualify  for a commission  under the relevant contracts. Indeed,  the  CFO of both VRTA
and VRTB even told Shustek  that he was not entitled  to the commissions.  But following  Shustek’s
misrepresentations,  the VRTA and VRTB boards of directors approved  the payments—and  the
CFO resigned over the issue. For one of the commission  payments in  November  2017, Shustek  paid
hims e lf    the   c ommis s ion  first,  then later got approval  from the boards of directors of VRTA and
VRTB without  telling  them he had already taken the money.
27. The net effects of this  Shustek-created property  carousel were that The  P arking
REIT received  properties  valued  at  $53.6  million   and  $1.4  million   in  cash from VRTA and VRTB
w hile   Shustek hims e lf  pocketed at least $1.75  millio n   in  c ommis s ions   and fees. On the other hand,
VRTB gave up the $10 million  still  owed on its construction  loan;  VRTA and VRTB pa id  millions
buying  other,  more desirable  real estate (parking  and storage facilities)  that ended up with The
P arking  REIT; and VRTA and VRTB paid Shustek’s $1.65  million   commission.
28. Shustek  and  Vestin  Mortgage  designed  the  series  of  transactions  to  favor  their  own
interests above VRTA’s and VRTB’s, thereby breaching  the fiduciary  duties  they owed as
investment   advisers  to  VRTA  and  VRTB.

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29. As with  the $29  million payment  scheme outlined  in Section B above, Shustek
knowingly  or recklessly directed VRTA and VRTB to publish  false and misleading  statements in
their  SEC and OTC filings about the repeated sales of the six properties and the resulting  payments
to Shustek. The   f ilings  purport  to  disclose  all  transactions  with  Shustek  and  related  parties,  but,  in
fact, omit  Shustek’s  $1.65  million   commission   payment.  Shustek  signed  all  of  these  public  filings
containing the   mis inf or ma t io n,  specif ic a lly:
• Three VRTB quarterly  reports  (Forms  10-Q),   f ile d  between 05/18/2016 and  11/10/2016;
• VRTB’s “Definitive  P roxy Statement” (Form DEF 14A),  f ile d  01/17/2017;
• Three VRTA OTC annual  and quarterly reports,  f ile d  between 04/11/2016 and 08/19/2016;
• Two VRTB OTC quarterly  reports f ile d  on 12/06/2017;  and
• VRTB’s “Definitive  P roxy Statement” (Form DEF 14A),  f ile d  01/17/2017.
(See Appendix  A.)
30. Some of the VRTA and VRTB public  filings  were also false and  misleading  as to
the  2017  property  transactions  because they  failed  to  dis c los e  the key fact that Shustek’s business
partner was the f ina l buyer. Although  the buildings  had been sold  four times in     as many years, they
had effectively taken  a round-trip  and ended up in  2017  back w ith  their  original   owner, Shustek’s
business partner. Again,  Shustek signed  these public  filings  with the misinformat ion:
• VRTB’s “current report” (Form 8-K)  filed  to  signify  a  major  event,  filed  02/01/2017;
• Two VRTA OTC annual and quarterly  reports,  f ile d  between 12/14/2017 and 05/15/2018;  and
• Six  VRTB OTC  annual  and  quarterly  reports,  filed  between  12/06/2017 and 04/16/2019.
(See Appendix  A.)

D. Shus te k Deceived the  VRTA and VRTB Boards of Directors into Paying Him $8
Million in  a Se curitie s  Trans action.
31. In yet another effort to put money  belonging   to  VRTA and VRTB into  his own
pocket, and  yet  another  breach  of  his  fiduciary   duty  as  their  investment  adviser,  Shustek  deceived
their   boards of directors  in  order to get them to approve  the companies’   purchase of the Vestin
Adviser  for  approximately  $8.7 million.  Because Shustek was the sole owner of the Vestin Adviser,
he would  personally  receive this  money over three years.

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32. Shustek  also  transferred  some  stock  from  The P arking REIT to  VRTA and  VRTB as
part of the deal,  but this did  not change the big  picture—that  the purchase price made no economic
sense for VRTA and VRTB. Both companies  had been failing  for years, and their combined total
worth (as measured by market capitalization) was under $7 million, w e ll  le s s   tha n  the   $8. 7  million
price tag for the Vestin Adviser.  But Shustek convinced  the  boards  of  directors  to  approve  that
pr ic e  by making the Vestin Adviser  appear more  valuable  than  it  was. On December 20,  2017, he
provided to the VRTA and VRTB boards an expert consultant’s  report,  purporting  to value  the
Vestin Adviser  at $32  million.  But this   valuation was premised  on false information Shustek
provided to the consultant.  Spe c if ic a lly,   Shustek   told the consultant to assume in  his   c a lc ula tions
that the Vestin Adviser  would receive $1.5  million   in  loan  origination   fees  during  2017,  increasing
by five percent each year thereafter.
33. Shustek knowingly  or recklessly  provided  the false report to the boards of directors,
even though  the  assumptions that  he had supplied  to the consultant were f a ls e for three reasons.
Fir s t,  as Shustek  knew by the time he presented the consultant’s  report to the boards in  late
December 2017, the Vestin Adviser  had actually only  obtained  about one-tenth of the origination
fees that the report assumed ($150,000,   not  $1.5  million).  Second, as Shustek knew or was reckless
in  not  knowing,   the  assumption   of  a  five  percent  increase  in  fees  each  year  had  no  reasonable  basis
because Shustek had already shifted the business  of VRTA and VRTB away from  loan  origination
(and he therefore expected lower fees in the future). Fina lly,  Shustek  knew  or  was  reckless  in  not
knowing the rosy predictions  of  consistent  growth  were  undermined   by  VRTA’s and VRTB’s poor
financial  performances  in  the   la s t  several years.

E. Shus te k M ade  a Fals e  and M is le ading State me nt in a VRTB SEC Filing  Re garding a
Cons piracy to Fals ify VRTB’s  Tax Re turns .
34. Shustek’s close associates—including  a VRTB director  and a VRTB accountant who
was also the CFO of The P arking  REIT—pled  guilty  to a tax-fraud-and-illic it-payment  scheme
involving the   f a ls if ic a tion   of   VRTB’s 2013 tax return. According  to the associates’ guilty  pleas,
which  were  made  in  2019  and  2020,  the VRTB tax return falsely  claimed that certain companies
(the “Tax Fraud  Companies”)  paid  VRTB  approximately   $11  million,   and  these fictional  payments

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were used to  reduce the Tax Fraud Companies’  own tax bills.  Shustek’s associates were paid by the
Tax Fraud Companies  for falsifying   the VRTB return,  and  one of them wired  approximately
$300,000 of that money to Shustek.
35. On May 18,  2016,  VRTB filed a Form  10-Q with the SEC that contained  a false and
misleading  statement regarding  the tax scheme,  which  Shustek  personally   signed. Specifically,  the
f iling  mis le a ding ly  suggested  that  an outside  company was responsible  for the false return and  that
it  was unknown if the company’s directors  or officers had any involvement.  But Shustek knew,  or
was reckless in  not knowing,  at the time  he signed  the filing—because VRTB’s accountant,  who
was also an officer of the affiliated  Parking REIT,  had told  him  so—that the accountant and
VRTB’s director were responsible  for the scheme. Additionally,   as discussed  above, Shustek
personally received  a payment  from the  VRTB accountant  which  came from  the scheme.
FIRST CLAIM FOR RELIEF
Violations  of Section  10(b) of the Exchange Act and Rule 10b-5 Thereunder
by Defendants Shustek and Vestin Mortgage
36. The SEC re-alleges  and  incorporates  by  reference  paragraph  nos. 1 through 35.
37. By engaging  in the  conduct  described  above,  Defendants Shustek and Vestin
Mortgage,  directly  or indirectly,  in connection  with the purchase or sale of securities,  by the use of
means or instrumentalities  of interstate commerce, or the mails,  with  scienter:
(1) employed  devices, schemes, or artifices to defraud;
(2) made untrue statements of material  fact or omitted  to state material  facts
necessary  in  order  to  make  the  statements  made,  in  the  light   of  the
circumstances  under  which  they  were  made,  not  misleading;   and
(3) engaged  in  acts, practices, or courses of business  which operated or would
operate as a fraud or deceit upon other persons, including  purchasers and
sellers of securities.
38. By reason of the foregoing,  Defendants Shustek and Vestin Mortgage violated,  and
unless restrained  and  enjoined   will   continue  to  violate,   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].

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SECOND CLAIM FOR RELIEF
Violations  of Section 17(a) of the Securities Act
by Defendants Shustek and Vestin Mortgage
39. The SEC re-alleges  and incorporates  by reference paragraphs nos. 1 through 35.
40. By engaging  in the conduct  described above, Defendants Shustek  and Vestin
Mortgage,  in the offer or sale of securities,  by use of the means or instruments  of transportation  or
communication  in interstate commerce or by use of the   ma ils ,   dir e c tly   or   indir e c tly :
(1) with scienter,  employed  devices,  schemes or artifices to defraud;
(2) obtained  money  or  property  by  means  of untrue statements of material  facts or
omissions  to state material  facts necessary to make the statements made, in  the
light   of  the  circumstances  under  which  they  were  made,  not  misleading;   and
(3) engaged  in  transactions,  practices  and  courses  of  business  which  have
operated, are now operating  or will  operate as a fraud or deceit upon  the
purchasers.
41. By reason of the foregoing,  Defendants Shustek  and Vestin Mortgage have violated,
and unless restrained and enjoined  will continue  to violate,  Section 17(a)  of the Securities  Act [15
U.S.C. § 77q(a)].
THIRD CLAIM FOR RELIEF
Violations  of Sections  206(1) and (2) of the Investment Advisers Act of 1940
by Defendants Shustek and Vestin Mortgage
42. The SEC re-alleges and incorporates  by reference paragraphs nos. 1 through 35.
43. Defendants Shustek  and  Vestin  Mortgage  were  at all relevant times investment
advisers  within   the  meaning  of  Section  202(a)(11)  of  the  Advisers  Act  [15  U.S.C.  §  80b-2(a)(11)].
44. Defendants,  by  use  of  the  mails  or  any  means  or  instrumentalit y   of  interstate
commerce, directly  or indirectly:
(1) with scienter, employed devices, schemes, and artifices to defraud a c lie nt  or
prospective  client;  and

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(2) engaged in transactions, acts, practices and  courses  of  business  which  operated
as a fraud or deceit upon  any client  or prospective  client.
45. By reason of the foregoing,  the Defendants Shustek  and Vestin Mortgage  have
violated,  and  unless  restrained and  enjoined w ill continue  to  violate,  Sections  206(1)  and  206(2)  of
the Investment Advisers  Act of 1940 [15  U.S.C. §§80b-6(1)  and  80b-6(2)].
46. By reason of the foregoing,  Defendant Shustek also knowingly  or recklessly
provided  substantial  assistance to Vestin Mortgage,  in violating Sections  206(1)  and  206(2)  of the
Investment  Advisers  Act  of  1940  [15  U.S.C.  §§80b-6(1) and 80b-6(2)],  and  thereby  aided  and
abetted such violations,  and unless  restrained and enjoined,  will  continue  to aid and abet violations
of these provisions.
FOURTH CLAIM FOR RELIEF
Aiding and Abetting Violations  of Exchange Reporting Act Requirements
by Shustek
47. The SEC re-alleges  and  incorporates  by reference Paragraph Nos. 1 through 35.
48. As an issuer of securities  registered with the SEC, VRTB was  required  to  file  with
the SEC quarterly  reports,  in  accordance  with  applicable   rules  and  regulations,   which  included
information  as necessary to make the statements made in the reports,  in the light  of the
circumstances  under  which  they  were  made  not  misleading.  By the conduct  described above,
VRTB failed  to  do  so,  in  violation   of  Section  13(a)  of  the  Exchange  Act  [15  U.S.C.  §  78m(a)],  and
R ule s  13a-13,  and 12b-20  thereunder [17 C.F.R. §§ 240.13a-13 and  240.12b-20].
49. By reason of the foregoing,  Defendant  Shustek knowingly  or recklessly  provided
substantial  assistance to VRTB,  in  viola ting  Section  13(a) of the Exchange Act [15 U.S.C. §
78m(a)],  and Rules  13a-13 and 12b-20  thereunder  [17  C.F.R.  §§ 240.13a-13  and 240.12b-20],  and
thereby  aided  and  abetted  such  violations ,   and  unless  restrained  and enjoined,  will  continue  to  a id
and abet viola tions   of these provisions.

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PRAYER FOR RELIEF
WHEREFORE,  the  SEC respectfully  requests that this  Court:
I.
Enter an order enjoining  Defendants Shustek  and  Vestin  Mortgage  from  violating   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],
Section  17(a) of the Securities  Act [15  U.S.C. § 77q(a)],  and Sections  206(1)  and 206(2)  of  the
Advisers  Act [15  U.S.C. § 77q(a)],  and  enjoining   Defendant  Shustek  from  violating   Section  13(a)  of
the Exchange Act [15  U.S.C.  §  78m(a)],  and  Rules  13a-13 and 12b-20  thereunder [17 C.F.R. §§
240.13a-13  and 240.12b-20].
II.
Enter an order, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and
Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], prohibiting Defendant Shustek from
serving as an officer or director of any entity  having  a class of securities registered with the SEC
pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant
to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)].
III.
 Enter an order prohibiting  Defendant Shustek from participating  in an offering of penny stock,
pursuant to Section 21(d)(6)(A) of the Exchange Act [15 U.S.C. § 78u(d)(6)(A)] and Section 20(g)(1) of
the Securities Act) [15 U.S.C. § 77t(g)(1)].
IV.
Enter an order requiring  Defendants Shustek  and Vestin Mortgage  to  each disgorge  their
respective ill-gotten   gains,  plus  prejudgment  interest  thereon.
V.
Enter an order requiring  Defendants Shustek  and Vestin Mortgage  to  each pa y  c ivil   pe na ltie s
pursuant  to  Section  21(d) of the Exchange Act [15 U.S.C. § 78u(d)(3)],  Section 20(d)  of the
Securities  Act [15  U.S.C. § 77t(d)],  and Section  209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)].

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VI.
Retain jurisdiction  of this  action in accordance with the principles  of equity  and the Federal
Rules of Civil  P rocedure in  order to implement  and carry out the terms of all  orders and decrees that
may  be  entered,  or  to  entertain  any  suitable   application   or  motion   for  additional   relief  within   the
jur is dic tion  of this  Court.
VII.
Grant such other and further relief as this  Court may determine  to be just,  equitable,  and
necessary.

Dated:   July  29,  2021     /s/ Ruth Hawley
Ruth  Hawley
Attorney for P laintiff
SECURITIES  AND EXCHANGE
COMMISSION

Appe ndix A
Fals e  and Mis le ading Filings
VRTA Form 10-K,  filed  03/31/2014
 VRTA Form 10-Q,  filed   05/14/2014
VRTA Form 10-Q,  filed  08/13/2014
VRTA Form 10-Q,  filed  11/13/2014
 VRTA Form 10-K,  filed   03/31/2015
VRTA Form 10-Q,  filed  05/12/2015
VRTA Form  10-Q,  filed  08/14/2015
VRTA Form DEF 14A, filed  10/26/2015
VRTA Form 10-Q,  filed  11/16/2015
VRTA  annual  report,  filed  04/11/2016
VRTA  quarterly  report,  filed  05/20/2016
VRTA  quarterly  report,  filed  08/19/2016
VRTA quarterly report,  filed 11/17/2016
VRTA  quarterly  report,  filed  04/17/2017
VRTA  quarterly  report,  filed  12/14/2017
VRTA  annual  report,  filed  05/15/2018
VRTA  quarterly  report,  filed  06/04/2018
VRTA  quarterly  report,  filed  10/05/2018
VRTA amended quarterly  report,  filed 10/05/2018
VRTA  quarterly  report,  filed  11/06/2018
VRTA  annual  report,  filed  04/16/2019
VRTB Form 10-Q,  filed   11/14/2013
VRTB Form 10-K,  filed   03/31/2014
VRTB Form 10-Q,  filed   05/14/2014
VRTB Form 10-Q,  filed   08/13/2014
VRTB Form 10-Q,  filed   11/13/2014
VRTB Form 10-K,  filed   03/31/2015
VRTB Form 10-Q,  filed   05/12/2015
VRTB Form 10-Q,  filed   08/14/2015
VRTB Form 10-Q,  filed   11/16/2015
VRTB Form 10-K,  filed   03/30/2016
VRTB Form 10-Q,  filed   05/18/2016
VRTB Form 10-Q,  filed   08/05/2016
VRTB Form 10-Q,  filed   08/15/2016
VRTB Form 10-Q,  filed   11/10/2016
VRTB Form DEF 14A, filed  01/17/2017
VRTB Form 8-K,  filed  02/01/2017

VRTB  quarterly  report,  filed  12/06/2017   (for  the  period  ending  in  June  2017)
VRTB  quarterly  report,  filed  12/06/2017   (for  the  period  ending  in  September
2017)
VRTB  annual  report,  filed  05/15/2018
VRTB  quarterly  report,  filed  06/04/2018
VRTB  quarterly  report,  filed  10/05/2018
VRTB  quarterly  report,  filed  11/13/2018
VRTB  annual  report,  filed  04/16/2019

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ERIN E. SCHNEIDER (Cal. Bar No. 216114) 
  [email protected] 
MONIQUE C. WINKLER (Cal. Bar No. 213031) 
  [email protected] 
JEREMY E. PENDREY (Cal. Bar No. 187075) 
  [email protected] 
MARC D. KATZ (Cal. Bar No. 189534) 
  [email protected] 
DAVID ZHOU (NY Bar No. 4926523) 
  [email protected] 
RUTH L. HAWLEY (Cal. Bar No. 253112) 
  [email protected] 

Attorneys for Plaintiff 
SECURITIES AND EXCHANGE COMMISSION 
44 Montgomery Street, Suite 2800 
San Francisco, California 94104 
Telephone:  (415) 705-2500  
Facsimile:  (415) 705-2501 

SECURITIES AND EXCHANGE COMMISSION, 

Plaintiff, 

v. 

MICHAEL V. SHUSTEK and VESTIN 
MORTGAGE LLC, 

Defendants. 

Case No. 

COMPLAINT 

JURY TRIAL DEMANDED 

Plaintiff Securities and Exchange Commission (the “SEC”) alleges: 

SUMMARY 

1. Since at least 2012, Michael Shustek orchestrated a series of varied and complex 

fraudulent schemes that shared one common theme: He devised ways to enrich himself at the 

expense of those who invested in entities that he ran. As the CEO and day-to-day operator, Shustek 

exerted control over the two real estate investment trusts that bore the brunt of his misconduct, 

Vestin Realty Mortgage I (“VRTA”) and Vestin Realty Mortgage II (“VRTB”). In many of 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEVADA 

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these misdeeds, Shustek acted in concert with another Shustek-owned-and-controlled entity, 

defendant Vestin Mortgage LLC (the “Vestin Adviser”), which acted as the investment adviser 

to, and manager of, VRTA and VRTB.  

2. In one brazen plot, Shustek drained $29 million from VRTA and VRTB, and then 

funneled the money into his newer venture called The Parking REIT. In another maneuver, Shustek 

arranged for VRTA and VRTB enter into a complicated string of money-losing transactions in 

which the same six buildings were repeatedly re-sold for his and The Parking REIT’s benefit. In a 

variation on the theme, Shustek also deceived the boards of directors of VRTA and VRTB—and 

violated his fiduciary duties to the entities—in two separate securities transactions, to get the 

companies to pay him almost $10 million. And Shustek repeatedly misled investors by causing 

VRTA and VRTB to make false and misleading statements in public securities filings—primarily 

to disguise Shustek’s own self-dealing.  

3. This Complaint seeks to hold Shustek accountable for his near-decade-long 

wrongdoing, which began less than six years after the SEC previously found that he had violated 

the securities laws. Specifically, the SEC seeks an order enjoining Shustek and the Vestin Adviser 

from further violations of the federal securities laws; prohibiting Shustek from serving as an officer 

or director of any public company; imposing a penny stock bar against Shustek; and requiring the 

Defendants to pay civil monetary penalties, and to disgorge their ill-gotten gains or unjust 

enrichment with prejudgment interest thereon. 

JURISDICTION AND VENUE 

4. The SEC brings this action pursuant to Sections 20(b) and 20(d) of the Securities 

Act of 1933 (“Securities Act”) [15 U.S.C. § 77t(b), (d)], Sections 21(d) and 21(e) of the Securities 

Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. 78u(d), (e)], and Section 209(d) of the 

Investment Advisers Act of 1940 (“Advisers Act”) [15 U.S.C. § 80b-9(d)].   

5. The Court has jurisdiction over this action, and venue lies in this District, pursuant to 

Sections 20(b), 20(d), and 22(a) of the Securities Act [15 U.S.C. §§ 77t(b), 77t(d), 77v(a)], Sections 

21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d), 78u(e), and 78aa], and 28 U.S.C. § 

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1391, and Sections 209(d), 209(e), and 214 of the Advisers Act [15 U.S.C. §§ 80b-9(d), 80b-9(e), 

80b-14].  

6. Defendants, directly or indirectly, made use of the means and instrumentalities of 

interstate commerce or of the mails in connection with the acts, transactions, practices, and courses 

of business alleged in this complaint. Certain transactions, acts, practices and courses of business 

that form the basis for the violations alleged in this Complaint occurred within Clark County, 

Nevada. 

DEFENDANTS 

7. Michael V. Shustek is 62 years old and resides in Las Vegas, Nevada. He founded 

defendant Vestin Mortgage LLC, as well as several companies that invested in real estate-related 

assets and whose securities were sold to the public. In a 2006 Order, the SEC found that Shustek 

and two companies he controlled violated Sections 17(a)(2) and (3) of the Securities Act, and 

ordered Shustek, among other things, to cease and desist from further violations. 

8. On December 9, 2019, Shustek entered into an agreement with the SEC, which 

provides that the running of any statute of limitations applicable to an action against Shustek by the 

SEC, including any sanctions or relief that might be imposed, is tolled for the period beginning on 

December 9, 2019 through March 9, 2020. 

9. Vestin Mortgage LLC is a Nevada limited liability company with its principal 

place of business in Las Vegas, Nevada. It is solely owned and controlled by Shustek, and is the 

manager of, and investment adviser to, VRTA and VRTB. It has no officers or employees other 

than Shustek.  

FACTUAL ALLEGATIONS 

A. Shustek Controlled the Entities Involved In the Misconduct. 

10. Shustek controlled and operated an entire ecosystem of companies in which some 

businesses provided advice about investments, and others made the investments. One of his 

investment advisory companies was the Vestin Adviser. Together, Shustek and the Vestin Adviser 

controlled and advised VRTA and VRTB, which were publicly-traded, real estate investment trusts, 

or “REITs.” In general, REITs are companies that own income-producing real estate or real estate-

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related assets and distribute the majority of their income to their investors through dividends. 

According to their public filings, VRTA and VRTB generally invested in real estate mortgage loans 

and real property.   

11. Per written agreements, Defendants Shustek and the Vestin Adviser were at all 

relevant times the managers to VRTA and VRTB. In addition, Shustek was the CEO, sole owner 

and only officer and employee of the Vestin Adviser. In practice, that meant Shustek himself made 

the investment decisions for VRTA and VRTB, and, for at least the last decade, he invested 

significant amounts of their assets into securities. During the seven-year period between 2011 and 

2018, securities comprised more than 20% of VRTA’s assets for six of the years, and more than 

20% of VRTB’s assets for four of the years. Since 2018, more than half of both companies’ assets 

have been securities. Shustek and the Vestin Adviser received fees and other compensation for the 

advice they provided regarding securities investments.  

12. As the CEO of VRTA and VRTB, Shustek approved and signed public filings made 

by VRTA and VRTB. From 2006 to 2015, VRTA filed public reports with the SEC and traded its 

securities on the Nasdaq Global Select Market (“Nasdaq”). VRTB, which also traded its securities 

on the Nasdaq, filed public reports with the SEC from 2006 until 2017.  

13. After 2015 and 2017, respectively, the securities of VRTA and VRTB went from 

being traded on the Nasdaq to being traded on the over-the-counter (“OTC”) market. Securities 

trade OTC because they do not meet the financial or listing requirements to list on a formal market 

exchange like the Nasdaq. Generally, they are low-priced and thinly traded and are traded via a 

broker-dealer network instead of a centralized exchange. But VRTA and VRTB continued to 

publish annual and quarterly reports to the public about their businesses and financial condition. 

Those filings, many of which were approved and signed by Shustek, were publicly posted on 

otcmarkets.com, and linked to on VRTA’s and VRTB’s websites. 

14. This “Vestin” group of businesses was just one part of Shustek’s corporate stable.  

He also controlled and ran a Nevada company called MVP Realty Advisors, LLC (“Shustek 

Parking Advisers”), which was jointly owned by VRTA and VRTB and operated as an investment 

adviser. Shustek and Shustek Parking Advisers, in turn, controlled and advised a private Maryland 

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corporation called The Parking REIT, which has its principal place of business in Las Vegas and 

primarily invests in parking facilities.   

15. Although VRTA and VRTB and The Parking REIT were legally distinct entities 

with different shareholders, Shustek used his near-total control over all of the companies to 

repeatedly raid the assets of VRTA and VRTB to benefit The Parking REIT and to collect millions 

of dollars for himself along the way. As described in detail below, Shustek caused VRTA and 

VRTB to transfer away tens of millions of dollars and to lose money on real estate deals to benefit 

The Parking REIT. To conceal his fraudulent actions from VRTA’s and VRTB’s shareholders, 

Shustek signed off on dozens of false and misleading SEC and OTC filings for those two 

companies, and he also made misrepresentations to their respective boards of directors. 
 

B. Shustek Directed VRTA and VRTB to Transfer Almost $30 Million to Benefit The 
Parking REIT. 

16. As part of his scheme to use VRTA and VRTB—companies with both retail and 

institutional investors—as piggy banks for The Parking REIT, Shustek and the Vestin Adviser 

caused the two investment companies to give up more than $29 million between 2012 and 2017.  

That money went to Shustek Parking Advisers and another Shustek-controlled intermediary 

company, both of which (at Shustek’s direction) used the funds to pay the bills of The Parking 

REIT.   

17. VRTA and VRTB received little in return for giving away nearly $30 million of 

their cash. Neither company had a significant prior ownership interest in The Parking REIT, and 

neither received any equity interest in that business in exchange for the funds. Despite the amount 

of money involved and the complexity of the payment trails, Shustek disregarded even the most 

basic elements of legitimate, arms-length transactions: There were no written contracts governing 

the transfers of money between VRTA/VRTB and the Shustek-intermediary companies, nor any 

written agreements between VRTA/VRTB and The Parking REIT. Shustek also provided no 

written cap on the amount of money that could be transferred from VRTA or VRTB, and omitted 

any fixed repayment schedule or interest rate for the $29 million. Not surprisingly, VRTA and 

VRTB were never fully repaid. 

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18. The money drain hobbled VRTA and VRTB in conducting the businesses they told 

investors they were engaged in—investing in mortgage loans and real property. In agreements 

publicly filed with the SEC, the Vestin Adviser pledged to protect “[VRTA’s and VRTB’s] 

investments consistent with [their] basic investment objectives.” Those agreements also prohibited 

the Vestin Adviser from making “it impossible to carry on the ordinary business of” VRTA and 

VRTB, or “possess[ing] [VRTA or VRTB] property or assign[ing] the rights of [VRTA or VRTB] 

in property for other than a [VRTA or VRTB] purpose.” But those promises did not stop 

Defendants from directing VRTA and VRTB to pour their cash into transactions that bore no 

resemblance to their “basic investment objectives.”  

19. Shustek hid this scheme from the public and investors. Throughout the years that he 

was using VRTA’s and VRTB’s money to benefit The Parking REIT, Shustek knowingly or 

recklessly directed VRTA and VRTB to publish false and misleading statements about these 

companies and these transactions in their public filings. In particular, Shustek approved numerous 

filings that falsely described the money siphoned out of VRTA and VRTB as “loans” in spite of the 

defects described in paragraph 17. Furthermore, many public filings misrepresented that almost all 

of VRTA’s and VRTB’s funds went to real estate investments and mortgage loans when, in reality, 

Shustek was using that money for his newer enterprise. Shustek personally signed about two dozen 

reports filed with the SEC containing this misinformation, including: 

• Two annual reports (Form 10-Ks) and six quarterly reports (Form 10-Qs) for VRTA, filed 

between 03/31/2014 and 11/16/2015;  

• Three annual reports (Form 10-Ks) and ten quarterly reports (Form 10-Qs) for VRTB, filed 

between 11/14/2013 and 11/10/2016; and 

• “Definitive Proxy Statements” (Form DEF 14A) for VRTA and VRTB, filed on 10/26/2015 

and 01/17/2017. 

(See Appendix A.) 

20. Shustek continued to knowingly or recklessly direct VRTA and VRTB to publish 

false and misleading statements about the $29 million payment scheme after the switch from 

trading on the Nasdaq to trading OTC. Shustek signed approximately 18 OTC reports that 

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contained the same type of misinformation included in the SEC filings: twelve VRTA OTC 

quarterly and annual reports filed between 04/11/2016 and 04/16/2019; and six VRTB OTC 

quarterly and annual reports filed between 12/06/2017 and 04/16/2019. (See Appendix A.) 

21. Shustek’s and Vestin Mortgage’s use of VRTA and VRTB’s assets to fund The 

Parking REIT also breached the fiduciary duties that they owed as investment advisers to VRTA 

and VRTB. 
 

C. Shustek Arranged for Repeated Re-Sales of the Same Buildings Between Affiliated 
Companies, Resulting in Significant Losses for VRTA and VRTB, and Made 
Misleading Statements About the Transactions in Public Filings and to VRTA’s and 
VRTB’s Boards of Directors. 

22. Shustek also diverted money from VRTA and VRTB through repeated sets of sales 

of the same commercial buildings, so that Shustek could fund The Parking REIT and benefit 

himself. From 2013 through 2017, Shustek directed that the same six Las Vegas office buildings 

change hands multiple times between VRTA/VRTB, The Parking REIT, and Shustek’s longtime 

business partner’s companies. Shustek structured the transactions so that VRTA and VRTB lost 

money on these transactions while everyone else – including himself – profited at their expense. 

Indeed, The Parking REIT made money on the sales, the business partner’s company got millions 

of dollars in loans forgiven, and Shustek pocketed more than $1.75 million in fees and 

commissions.  

23. The buildings were constructed in about 2007 by the business partner with the help 

of a substantial loan from VRTA and VRTB. In 2013, Shustek arranged for The Parking REIT to 

purchase the buildings from his business partner’s company in order to expand its portfolio of 

assets and thus make The Parking REIT more attractive to investors. As part of the payment, 

Shustek caused VRTB to forgive the approximately $10 million that his business partner’s 

company still owed on the original construction loan and VRTB got nothing in return.      

24. A year later, in 2014, Shustek again arranged for a swap of assets that benefited The 

Parking REIT, but not VRTA or VRTB. This time, he caused The Parking REIT to sell the 

buildings to VRTA and VRTB, which together paid The Parking REIT approximately $1.4 million 

in cash as well as ownership stakes in a number of other properties valued at $53.6 million—even 

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though VRTA and VRTB had no reason for buying the buildings other than to help The Parking 

REIT. 

25. The property churn continued in 2016 and 2017. In 2016, Shustek had VRTA and 

VRTB sell the buildings back to another of his business partner’s companies at a loss of 

approximately $9 million. While VRTA and VRTB retained the right to buy back the buildings in a 

year, Shustek soon directed them to sell that repurchase right to a different entity controlled by his 

business partner, thereby cementing his business partner’s ownership of the buildings. In exchange, 

VRTA and VRTB received some stock in The Parking REIT (which was difficult to value or 

monetize, since The Parking REIT was not publicly traded), along with less than $900,000 in cash. 

To make matters worse, VRTA and VRTB had to pay Shustek approximately $1.65 million in 

commissions for setting up these money-losing transactions. 

26. To obtain this $1.65 million commission, Shustek lied to VRTA’s and VRTB’s 

respective boards of directors by declaring that he was “entitled to a 3% commission.” But these 

sales did not qualify for a commission under the relevant contracts. Indeed, the CFO of both VRTA 

and VRTB even told Shustek that he was not entitled to the commissions. But following Shustek’s 

misrepresentations, the VRTA and VRTB boards of directors approved the payments—and the 

CFO resigned over the issue. For one of the commission payments in November 2017, Shustek paid 

himself the commission first, then later got approval from the boards of directors of VRTA and 

VRTB without telling them he had already taken the money.  

27. The net effects of this Shustek-created property carousel were that The Parking 

REIT received properties valued at $53.6 million and $1.4 million in cash from VRTA and VRTB 

while Shustek himself pocketed at least $1.75 million in commissions and fees. On the other hand, 

VRTB gave up the $10 million still owed on its construction loan; VRTA and VRTB paid millions 

buying other, more desirable real estate (parking and storage facilities) that ended up with The 

Parking REIT; and VRTA and VRTB paid Shustek’s $1.65 million commission.  

28. Shustek and Vestin Mortgage designed the series of transactions to favor their own 

interests above VRTA’s and VRTB’s, thereby breaching the fiduciary duties they owed as 

investment advisers to VRTA and VRTB. 

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29. As with the $29 million payment scheme outlined in Section B above, Shustek  

knowingly or recklessly directed VRTA and VRTB to publish false and misleading statements in 

their SEC and OTC filings about the repeated sales of the six properties and the resulting payments 

to Shustek. The filings purport to disclose all transactions with Shustek and related parties, but, in 

fact, omit Shustek’s $1.65 million commission payment. Shustek signed all of these public filings 

containing the misinformation, specifically:  

• Three VRTB quarterly reports (Forms 10-Q), filed between 05/18/2016 and 11/10/2016;  

• VRTB’s “Definitive Proxy Statement” (Form DEF 14A), filed 01/17/2017; 

• Three VRTA OTC annual and quarterly reports, filed between 04/11/2016 and 08/19/2016;  

• Two VRTB OTC quarterly reports filed on 12/06/2017; and 

• VRTB’s “Definitive Proxy Statement” (Form DEF 14A), filed 01/17/2017. 

(See Appendix A.) 

30. Some of the VRTA and VRTB public filings were also false and misleading as to 

the 2017 property transactions because they failed to disclose the key fact that Shustek’s business 

partner was the final buyer. Although the buildings had been sold four times in as many years, they 

had effectively taken a round-trip and ended up in 2017 back with their original owner, Shustek’s 

business partner. Again, Shustek signed these public filings with the misinformation: 

• VRTB’s “current report” (Form 8-K) filed to signify a major event, filed 02/01/2017;  

• Two VRTA OTC annual and quarterly reports, filed between 12/14/2017 and 05/15/2018; and 

• Six VRTB OTC annual and quarterly reports, filed between 12/06/2017 and 04/16/2019. 

(See Appendix A.) 
 

D. Shustek Deceived the VRTA and VRTB Boards of Directors into Paying Him $8 
Million in a Securities Transaction. 

31. In yet another effort to put money belonging to VRTA and VRTB into his own 

pocket, and yet another breach of his fiduciary duty as their investment adviser, Shustek deceived 

their boards of directors in order to get them to approve the companies’ purchase of the Vestin 

Adviser for approximately $8.7 million. Because Shustek was the sole owner of the Vestin Adviser, 

he would personally receive this money over three years.   

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32. Shustek also transferred some stock from The Parking REIT to VRTA and VRTB as 

part of the deal, but this did not change the big picture—that the purchase price made no economic 

sense for VRTA and VRTB. Both companies had been failing for years, and their combined total 

worth (as measured by market capitalization) was under $7 million, well less than the $8.7 million 

price tag for the Vestin Adviser. But Shustek convinced the boards of directors to approve that 

price by making the Vestin Adviser appear more valuable than it was. On December 20, 2017, he 

provided to the VRTA and VRTB boards an expert consultant’s report, purporting to value the 

Vestin Adviser at $32 million. But this valuation was premised on false information Shustek 

provided to the consultant. Specifically, Shustek told the consultant to assume in his calculations 

that the Vestin Adviser would receive $1.5 million in loan origination fees during 2017, increasing 

by five percent each year thereafter.  

33. Shustek knowingly or recklessly provided the false report to the boards of directors, 

even though the assumptions that he had supplied to the consultant were false for three reasons. 

First, as Shustek knew by the time he presented the consultant’s report to the boards in late 

December 2017, the Vestin Adviser had actually only obtained about one-tenth of the origination 

fees that the report assumed ($150,000, not $1.5 million). Second, as Shustek knew or was reckless 

in not knowing, the assumption of a five percent increase in fees each year had no reasonable basis 

because Shustek had already shifted the business of VRTA and VRTB away from loan origination 

(and he therefore expected lower fees in the future). Finally, Shustek knew or was reckless in not 

knowing the rosy predictions of consistent growth were undermined by VRTA’s and VRTB’s poor 

financial performances in the last several years.  
 

E. Shustek Made a False and Misleading Statement in a VRTB SEC Filing Regarding a 
Conspiracy to Falsify VRTB’s Tax Returns. 

34. Shustek’s close associates—including a VRTB director and a VRTB accountant who 

was also the CFO of The Parking REIT—pled guilty to a tax-fraud-and-illicit-payment scheme 

involving the falsification of VRTB’s 2013 tax return. According to the associates’ guilty pleas, 

which were made in 2019 and 2020, the VRTB tax return falsely claimed that certain companies 

(the “Tax Fraud Companies”) paid VRTB approximately $11 million, and these fictional payments 

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were used to reduce the Tax Fraud Companies’ own tax bills. Shustek’s associates were paid by the 

Tax Fraud Companies for falsifying the VRTB return, and one of them wired approximately 

$300,000 of that money to Shustek. 

35. On May 18, 2016, VRTB filed a Form 10-Q with the SEC that contained a false and 

misleading statement regarding the tax scheme, which Shustek personally signed. Specifically, the 

filing misleadingly suggested that an outside company was responsible for the false return and that 

it was unknown if the company’s directors or officers had any involvement. But Shustek knew, or 

was reckless in not knowing, at the time he signed the filing—because VRTB’s accountant, who 

was also an officer of the affiliated Parking REIT, had told him so—that the accountant and 

VRTB’s director were responsible for the scheme. Additionally, as discussed above, Shustek 

personally received a payment from the VRTB accountant which came from the scheme.   

FIRST CLAIM FOR RELIEF 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 Thereunder 

by Defendants Shustek and Vestin Mortgage 

36. The SEC re-alleges and incorporates by reference paragraph nos. 1 through 35. 

37. By engaging in the conduct described above, Defendants Shustek and Vestin 

Mortgage, directly or indirectly, in connection with the purchase or sale of securities, by the use of 

means or instrumentalities of interstate commerce, or the mails, with scienter: 

(1) employed devices, schemes, or artifices to defraud; 

(2) made untrue statements of material fact or omitted to state material facts 

necessary in order to make the statements made, in the light of the 

circumstances under which they were made, not misleading; and 

(3) engaged in acts, practices, or courses of business which operated or would 

operate as a fraud or deceit upon other persons, including purchasers and 

sellers of securities. 

38. By reason of the foregoing, Defendants Shustek and Vestin Mortgage violated, and 

unless restrained and enjoined will continue to violate, 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]. 

Case 2:21-cv-01416   Document 1   Filed 07/29/21   Page 11 of 17



  

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SECOND CLAIM FOR RELIEF 

Violations of Section 17(a) of the Securities Act 

by Defendants Shustek and Vestin Mortgage 

39. The SEC re-alleges and incorporates by reference paragraphs nos. 1 through 35. 

40. By engaging in the conduct described above, Defendants Shustek and Vestin 

Mortgage, in the offer or sale of securities, by use of the means or instruments of transportation or 

communication in interstate commerce or by use of the mails, directly or indirectly:  

(1) with scienter, employed devices, schemes or artifices to defraud;  

(2) obtained money or property by means of untrue statements of material facts or 

omissions to state material facts necessary to make the statements made, in the 

light of the circumstances under which they were made, not misleading; and  

(3) engaged in transactions, practices and courses of business which have 

operated, are now operating or will operate as a fraud or deceit upon the 

purchasers. 

41. By reason of the foregoing, Defendants Shustek and Vestin Mortgage have violated, 

and unless restrained and enjoined will continue to violate, Section 17(a) of the Securities Act [15 

U.S.C. § 77q(a)]. 

THIRD CLAIM FOR RELIEF 

Violations of Sections 206(1) and (2) of the Investment Advisers Act of 1940  

by Defendants Shustek and Vestin Mortgage 

42. The SEC re-alleges and incorporates by reference paragraphs nos. 1 through 35. 

43. Defendants Shustek and Vestin Mortgage were at all relevant times investment 

advisers within the meaning of Section 202(a)(11) of the Advisers Act [15 U.S.C. § 80b-2(a)(11)].  

44. Defendants, by use of the mails or any means or instrumentality of interstate 

commerce, directly or indirectly:  

(1) with scienter, employed devices, schemes, and artifices to defraud a client or 

prospective client; and  

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(2) engaged in transactions, acts, practices and courses of business which operated 

as a fraud or deceit upon any client or prospective client. 

45. By reason of the foregoing, the Defendants Shustek and Vestin Mortgage have 

violated, and unless restrained and enjoined will continue to violate, Sections 206(1) and 206(2) of 

the Investment Advisers Act of 1940 [15 U.S.C. §§80b-6(1) and 80b-6(2)].  

46. By reason of the foregoing, Defendant Shustek also knowingly or recklessly 

provided substantial assistance to Vestin Mortgage, in violating Sections 206(1) and 206(2) of the 

Investment Advisers Act of 1940 [15 U.S.C. §§80b-6(1) and 80b-6(2)], and thereby aided and 

abetted such violations, and unless restrained and enjoined, will continue to aid and abet violations 

of these provisions.  

FOURTH CLAIM FOR RELIEF 

Aiding and Abetting Violations of Exchange Reporting Act Requirements 

by Shustek 

47. The SEC re-alleges and incorporates by reference Paragraph Nos. 1 through 35. 

48. As an issuer of securities registered with the SEC, VRTB was required to file with 

the SEC quarterly reports, in accordance with applicable rules and regulations, which included 

information as necessary to make the statements made in the reports, in the light of the 

circumstances under which they were made not misleading. By the conduct described above, 

VRTB failed to do so, in violation of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)], and 

Rules 13a-13, and 12b-20 thereunder [17 C.F.R. §§ 240.13a-13 and 240.12b-20]. 

49. By reason of the foregoing, Defendant Shustek knowingly or recklessly provided 

substantial assistance to VRTB, in violating Section 13(a) of the Exchange Act [15 U.S.C. § 

78m(a)], and Rules 13a-13 and 12b-20 thereunder [17 C.F.R. §§ 240.13a-13 and 240.12b-20], and 

thereby aided and abetted such violations, and unless restrained and enjoined, will continue to aid 

and abet violations of these provisions.  

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COMPLAINT 
 

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PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that this Court: 

I. 

Enter an order enjoining Defendants Shustek and Vestin Mortgage from violating 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], 

Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)], and Sections 206(1) and 206(2) of the 

Advisers Act [15 U.S.C. § 77q(a)], and enjoining Defendant Shustek from violating Section 13(a) of 

the Exchange Act [15 U.S.C. § 78m(a)], and Rules 13a-13 and 12b-20 thereunder [17 C.F.R. §§ 

240.13a-13 and 240.12b-20]. 

II. 

Enter an order, pursuant to Section 20(e) of the Securities Act [15 U.S.C. § 77t(e)] and 

Section 21(d)(2) of the Exchange Act [15 U.S.C. § 78u(d)(2)], prohibiting Defendant Shustek from 

serving as an officer or director of any entity having a class of securities registered with the SEC 

pursuant to Section 12 of the Exchange Act [15 U.S.C. § 78l] or that is required to file reports pursuant 

to Section 15(d) of the Exchange Act [15 U.S.C. § 78o(d)]. 

III. 

 Enter an order prohibiting Defendant Shustek from participating in an offering of penny stock, 

pursuant to Section 21(d)(6)(A) of the Exchange Act [15 U.S.C. § 78u(d)(6)(A)] and Section 20(g)(1) of 

the Securities Act) [15 U.S.C. § 77t(g)(1)]. 

IV. 

Enter an order requiring Defendants Shustek and Vestin Mortgage to each disgorge their 

respective ill-gotten gains, plus prejudgment interest thereon. 

V. 

Enter an order requiring Defendants Shustek and Vestin Mortgage to each pay civil penalties 

pursuant to Section 21(d) of the Exchange Act [15 U.S.C. § 78u(d)(3)], Section 20(d) of the 

Securities Act [15 U.S.C. § 77t(d)], and Section 209(e) of the Advisers Act [15 U.S.C. § 80b-9(e)]. 

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VI. 

Retain jurisdiction of this action in accordance with the principles of equity and the Federal 

Rules of Civil Procedure in order to implement and carry out the terms of all orders and decrees that 

may be entered, or to entertain any suitable application or motion for additional relief within the 

jurisdiction of this Court. 

VII. 

Grant such other and further relief as this Court may determine to be just, equitable, and 

necessary. 

 

 

Dated:  July 29, 2021     /s/ Ruth Hawley      
Ruth Hawley 
Attorney for Plaintiff 
SECURITIES AND EXCHANGE 
COMMISSION 

Case 2:21-cv-01416   Document 1   Filed 07/29/21   Page 15 of 17



Appendix A 

False and Misleading Filings 

VRTA Form 10-K, filed 03/31/2014 
 VRTA Form 10-Q, filed 05/14/2014 
VRTA Form 10-Q, filed 08/13/2014 
VRTA Form 10-Q, filed 11/13/2014 
 VRTA Form 10-K, filed 03/31/2015 
VRTA Form 10-Q, filed 05/12/2015 
VRTA Form 10-Q, filed 08/14/2015 
VRTA Form DEF 14A, filed 10/26/2015 
VRTA Form 10-Q, filed 11/16/2015 
VRTA annual report, filed 04/11/2016 
VRTA quarterly report, filed 05/20/2016 
VRTA quarterly report, filed 08/19/2016 
VRTA quarterly report, filed 11/17/2016 
VRTA quarterly report, filed 04/17/2017 
VRTA quarterly report, filed 12/14/2017 
VRTA annual report, filed 05/15/2018 
VRTA quarterly report, filed 06/04/2018 
VRTA quarterly report, filed 10/05/2018 
VRTA amended quarterly report, filed 10/05/2018 
VRTA quarterly report, filed 11/06/2018 
VRTA annual report, filed 04/16/2019 

VRTB Form 10-Q, filed 11/14/2013 
VRTB Form 10-K, filed 03/31/2014 
VRTB Form 10-Q, filed 05/14/2014 
VRTB Form 10-Q, filed 08/13/2014 
VRTB Form 10-Q, filed 11/13/2014 
VRTB Form 10-K, filed 03/31/2015 
VRTB Form 10-Q, filed 05/12/2015 
VRTB Form 10-Q, filed 08/14/2015 
VRTB Form 10-Q, filed 11/16/2015 
VRTB Form 10-K, filed 03/30/2016 
VRTB Form 10-Q, filed 05/18/2016 
VRTB Form 10-Q, filed 08/05/2016 
VRTB Form 10-Q, filed 08/15/2016 
VRTB Form 10-Q, filed 11/10/2016 
VRTB Form DEF 14A, filed 01/17/2017 
VRTB Form 8-K, filed 02/01/2017 

Case 2:21-cv-01416   Document 1   Filed 07/29/21   Page 16 of 17



VRTB quarterly report, filed 12/06/2017 (for the period ending in June 2017) 
VRTB quarterly report, filed 12/06/2017 (for the period ending in September 
2017) 
VRTB annual report, filed 05/15/2018 
VRTB quarterly report, filed 06/04/2018 
VRTB quarterly report, filed 10/05/2018 
VRTB quarterly report, filed 11/13/2018 
VRTB annual report, filed 04/16/2019 

 

Case 2:21-cv-01416   Document 1   Filed 07/29/21   Page 17 of 17


	Attorneys for Plaintiff