The Securities and Exchange Commission (SEC) alleges that Collectors Café, an online memorabilia auction company, and its CEO Mykalai Kontilai, illegally tried to stop investors from reporting misconduct to the government in violation of the SEC’s whistleblower protection rules.
The SEC already sued Kontilai and Collectors Café for operating a “fraudulent $23 million securities offering based on false statements to investors.”
Kontilai allegedly gave the SEC an altered bank statement to hide $6 million he misappropriated from his company to fund his lavish lifestyle, including expenses at gentlemen’s clubs, luxury personal items at stores such as Louis Vuitton and Saks Fifth Avenue, and rent on an oceanfront condo in Miami.
SEC Whistleblower Protection Violations
The new allegation comes in an amended complaint filed on November 4, 2019. In it, the SEC charges that Collectors Café and Kontilai held investors’ money captive until they signed an agreement that prevented them from going to law enforcement.
The agreements are illegal and violate the SEC’s whistleblower protection rules, according to the complaint, which also states that the defendants sued two investors who they believed breached their agreements.
The SEC’s amended complaint charges Kontilai and Collectors Café with violations of whistleblower and antifraud provisions of federal securities laws and seeks permanent injunctions, penalties, and disgorgement.
Collecting SEC Whistleblower Awards
In addition to legal protections, whistleblowers may also be eligible to collect financial awards.
To be eligible for a whistleblower award, a person must provide the SEC with original, non-public information that leads to a successful enforcement action. A whistleblower award can be anywhere from 10 to 30 percent of the money collected when the sanction is $1 million or more. Since giving its first award in 2012, the SEC has paid 66 whistleblowers $387 million.
SEC Whistleblower Attorneys
Our attorneys represent whistleblowers including current and former employees of major brokerage firms. The SEC does not disclose the identity of whistleblowers, nor any information that could directly or indirectly disclose someone’s identity if requested by the SEC whistleblower and the individual is represented by counsel.
Individuals may file a whistleblower claim on their own, but many prefer to do so with the help of an experienced law firm that can guide them through the process and give them the best odds of collecting an award. Also, a whistleblower may remain anonymous if represented by counsel.
Silver Law Group represents whistleblowers in securities and investment fraud cases reported to the SEC. Our lawyers are admitted to practice in New York and Florida and represent SEC whistleblowers nationwide. These cases handled on a contingent fee basis. Call us toll free at 800-975-4345, or use our online contact form to get in touch.