SEC Obtains Final Judgment Against Detroit Area Businessperson, Viktor Gjonaj Who Fraudulently Used Investors Funds to Play Michigan State Lottery
Securities and Exchange Commission v. Viktor Gjonaj, No. 21-civ-10199 (E.D Michigan filed January 28, 2021)
Washington, DC (STL.News) On January 24, 2022, the U.S. District Court for the Eastern District of Michigan entered a Final Judgment against Viktor Gjonaj, whom the SEC previously charged 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 filed on January 28, 2021, 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 further 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.
Gjonaj previously agreed to a bifurcated settlement that left the determination of any monetary remedies against him to the court.
In a parallel criminal action, the U.S. Attorney’s Office for the Eastern District of Michigan filed criminal charges against Gjonaj. Gjonaj pled guilty to those charges and was sentenced to a prison term of 53 months followed by three years of supervised release and ordered to pay forfeiture and restitution.
The Final Judgment enjoins Gjonaj from 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. The Final Judgment further finds Gjonaj liable for disgorgement and prejudgment interest of $21,128,466 but deems that amount satisfied by the restitution order in the parallel criminal matter. The final judgment does not order Gjonaj to pay a civil penalty in light of the criminal conviction and prison sentence.
The SEC’s litigation was led by Daniel Hayes and assisted by James O’Keefe and Marlene Key-Patterson of the SEC’s Chicago Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of Michigan and the Federal Bureau of Investigation.