U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 25899 / November 21, 2023
Securities and Exchange Commission v. Michael V. Shustek and Vestin Mortgage LLC, 2:21-cv-01416-JCM-BNW (D. Nev. filed July 29, 2021)
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.
The SEC’s litigation was conducted by Ellen Chen, John Han, Ruth Hawley, Marc Katz, Sheila O’Callaghan, and David Zhou, and was supervised by Susan LaMarca and Jason H. Lee, all of the San Francisco Regional Office. The SEC’s investigation was conducted by Ms. Hawley and Michael Foley and supervised by Jeremy Pendrey.