Denver District Court Judge Martin Egelhoff has signed a Temporary Restraining Order, Order Freezing Assets, Order of Non-Destruction of Records, and Preliminary Injunction in the case of Colorado Securities Commissioner Gerald Rome versus Gary Jule Dragul, 55, of Cherry Hills Village. The case is being investigated by the Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA).
“We allege that the defendant engaged in a massive fraud by covering up the sale of one of the commercial properties from investors and commingling the investors’ money from each of the businesses for no legitimate business purpose,” stated Rome. “The actions authorized by the judge’s ruling will allow for whatever assets remain of Dragul’s fraudulent business practice to be frozen and, pending a favorable result from this case, kept for distribution to those who have been harmed.”
The motion submitted for the civil case alleges that between 2008 and 2015, Dragul sold more than $52 million worth of interests in 14 different limited liability companies to approximately 175 investors. Investments were primarily sold in the form of membership interests in these LLCs that acquired commercial real estate using investor funds and loans. One such venture was the Plaza at the Mall of Georgia, which Dragul, through an LLC purchased in 2008 for $25.9 million. Documents provided to investors allegedly contained minimal information and virtually no disclosure of the risks associated with commercial real estate investments.
Despite selling the property in April 2017 at a significant profit, it is alleged that Dragul failed to inform individual investors of the sale and continued making monthly distribution payments to these individuals, leading them to believe that the LLC in which they invested still owned the property. To date, individual investors in the Plaza project have not received a return of principal resulting from the sale of the property.
With respect to the other properties, rather than treat each business as a separate legal entity, it is alleged that Dragul diverted the funds from all the businesses and commingled the funds with other businesses, his own personal funds, and the funds of family members. It is further alleged that contrary to the representations made by Dragul to investors that the funds would be sued only for the specific purpose of purchasing the commercial real estate, the funds were diverted for undisclosed and unrelated purposes.
2018 All Rights Reserved. Villager Publishing |