Denver District Court Judge Martin Egelhoff has granted an order of preliminary injunction in the case of Colorado Securities Commissioner Gerald Rome versus Gary Jule Dragul, 55, of Cherry Hills Village. Egelhoff also appointed receiver Harvey Sender to immediately take over management of all assets controlled by the defendant.
“The appointment of a receiver is an important step for the victims of the defendant’s alleged fraudulent activity as it relates to his real estate businesses,” Rome stated. “This will allow the court-appointed receiver to identify, locate and maintain any remaining assets so that they can eventually be returned to the people who we suspect were taken advantage of and lost money through these dealings.”
A complaint for injunction and other relief filed on behalf of the commissioner by the Colorado Attorney General’s Office alleged 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.
Dragul has been ordered to turn over information on all real estate property, accounts, books, records, and information of any kind related to his LLCs. As part of the granted preliminary injunction, Dragul is prohibited from engaging in any securities-related business in Colorado, destroying any records related to the case, and all assets are frozen.
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