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Securities and Exchange Commission v. Michael V. Shustek and Vestin Mortgage LLC, 2:21-cv-01416-JCM-BNW

SEC Obtains Final Judgments Against Las Vegas Real Estate CEO and His Investment Advisory Firm

On November 15, 2023, the Securities and Exchange Commission obtained final judgments against Michael V. Shustek and his wholly owned investment advisory firm, Vestin Mortgage LLC.The SEC had charged Shustek and Vestin Mortgage LLC with violations of the federal securities laws in a complaint filed on July 29, 2021 in the U.S. District Court for the District of Nevada. The complaint alleges that since at least 2012, Shustek enriched himself and a REIT that he controlled, The Parking REIT, at the expense of two companies that he had founded earlier. According to the complaint, Shustek drained $29 million from the companies in order to funnel the money into The Parking REIT, and later directed the companies to enter into a series of money-losing transactions in which the same six buildings were repeatedly re-sold. The complaint also alleges that Shustek violated his fiduciary duties to the companies in two additional securities transactions.Without admitting or denying the allegations, Shustek and Vestin Mortgage LLC consented to the entry of final judgments permanently enjoining them from violating Sections 17(a)(2) and (3) of the Securities Act of 1933 and Section 206(2) of the Investment Advisers Act of 1940. Shustek further consented to the entry of a final judgment: (1) ordering that he pay a $300,000 civil penalty; (2) for five years following entry of the judgment, prohibiting him from acting as an officer or director of any public company; and (3) for five years following entry of the judgment, enjoining him from participating in the issuance, purchase, offer, or sale of any security provided, however, that such injunction shall not prevent him from purchasing or selling securities for his own personal account.

On August 2, 2021, the Securities and Exchange Commission (SEC) announced securities fraud charges were filed against Michael Shustek, CEO of several real estate investment trusts (REITs), as well as Vestin Mortgage LLC. The SEC 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. The SEC's complaint, which was filed in the District of Nevada, charges Shustek and Vestin Mortgage with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and (2) of the Investment Advisers Act of 1940, and Shustek with aiding and abetting violations of Section 13(a) & Rules 13a-13 and 12b-20 of the Exchange Act. The complaint seeks permanent injunctions, disgorgement, prejudgment interest, civil penalties, and an officer and director bar and penny stock bar against Shustek.

Read the full complaint here https://www.sec.gov/litigation/complaints/2021/comp25154.pdf