GDA Real Estate Services, LLC, Owner Charged with Securities Fraud | Goodman & Nekvasil P.A. May Recover Investor Losses
A Colorado State Grand Jury has issued an indictment of Gary Jule Dragul, 56, of Cherry Hills Village, alleging five counts of securities fraud. Dragul was previously indicted on nine counts of securities fraud in an April 2018 Grand Jury indictment.
Prosecutors from the Colorado Attorney General’s Office presented the case following an investigation into Dragul’s business practices by the Colorado Division of Securities, part of the Department of Regulatory Agencies (DORA).
The allegations in the indictment provide that Dragul, who has never held a securities license in Colorado, engaged in a course of business through his company GDA Real Estate Services, LLC, designed to defraud investors. The second indictment is related to offerings made by Dragul and GDA Real Estate Services, LLC for joint venture investments into two LLCs related to the purchase, management, and sale of commercial shopping centers.
Starting in 2007, Defendant Dragul is alleged to have solicited and issued promissory notes to support his business, GDA Real Estate Services, which used investor money to purchase and manage commercial real estate ventures, including commercial shopping centers. Between 2007 and 2008 Dragul raised significant capital, but his failure to pay investors according to terms resulted in multiple lawsuits, and unpaid funds totaling more than $4 million. The indictment alleges that before starting to solicit investors again in 2013, Dragul’s company showed an outstanding debt reflecting negative equity of over $8.7 million and a cash deficit of almost $300,000.
The indictment alleges that Defendant Dragul solicited and received investment funds without making a variety of disclosures to investors between 2009 and 2014 for an out of state shopping center. In addition, it is claimed that Dragul oversold membership interests in the venture. The indictment also alleges that between 2008 and 2016, Dragul solicited and received funds for a second out of state project. With this property, Dragul and GDA Real Estate Services, LLC are accused of failing to disclose the sale of the underlying property to investors, and then failing to repay investors either principal or appreciation. Dragul also allegedly neglected to mention to involved parties that he and GDA Real Estate Services, LLC were paid (and paid out) substantial commissions related to the sale of the property.
Additional allegations state that Dragul misappropriated investor funds and used them for non-authorized expenditures. These omitted facts induced investors to maintain their investments with him, and to make subsequent investments, constituting the alleged violations of the anti-fraud provisions of the Colorado Securities Act.
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