U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21659 / September 22, 2010
Securities and Exchange Commission v. Gustav George Bujkovsky, et al., United States District Court for the Southern District of California, Case No. 10-CV1965BEN (filed Sept. 21, 2010).
SEC CHARGES A CALIFORNIA LAWYER WHO PLEADED GUILTY TO TWO FELONY COUNTS FOR HIS ROLE IN A PHONY INVESTMENT POOL SCHEME
The Securities and Exchange Commission ("Commission") announced that it charged a California lawyer, Gustav George Bujkovsky, age 67, of Escondido, California, for his role in perpetrating a phony investment pool scheme directed by his clients.
The Commission's complaint, filed September 21, in federal court in San Diego, alleges that while Bujkovsky represented MAK 1 Enterprises Group, LLC ("MAK 1") and its principals, Mohit A. Khanna and Sharanjit K. Khanna, he personally defrauded certain MAK 1 investors, aided and abetted the fraud of MAK 1 and the Khannas, and offered and sold MAK 1's unregistered securities. Investors in the $35 million MAK 1 scheme were promised exorbitantly high returns through guaranteed investments such as foreign currency trading. MAK 1 was in fact a Ponzi scheme and was halted by an emergency action filed by the Commission in federal court in San Diego in August 2009. In that action, SEC v. Mohit A. Khanna, et al., Case No. 09CV1784BEN (filed Aug.17, 2009, the Commission charged MAK 1 and the Khannas with violations of the federal securities laws, Bujkovsky represented MAK 1 and the Khannas as clients between April and August 2009.
The complaint alleges that despite having notice that MAK 1 was conducting an unregistered and likely fraudulent securities offering, Bujkovsky made material misrepresentations and failed to disclose material facts to some MAK 1 investors. Bujkovsky misrepresented that MAK 1 was engaged in foreign currency trading and that his own clients invested in MAK 1 and had received the promised high returns, and that the MAK 1 investment was insured and had other downside risk protection. The complaint further alleges that after Mohit Khanna told Bujkovsky on July 9, 2009 that MAK 1 did not engage in foreign currency trading and was a fraud, Bujkovsky lulled certain investors by falsely representing that their money would be returned after problems were resolved with "intermediaries" including European banks. During the period of Bujkovsky's representation, MAK 1 raised more than $3.3 million from investors, over $1.9 million of which was returned to earlier investors as interest payments or return of principal, and over $1.5 million of which were sent to Bujkovsky's client trust account from MAK 1 or the Khannas. By funneling these funds through his client trust account and the account of a sham corporation he created, Bujkovsky helped the Khannas misappropriate about $1.3 million investor funds for their own use. Bujkovsky retained over $459,000 of investor funds, about half of which he used for his personal expenses or paid to his wife, Betty D. Hansen, who was named as a relief defendant in the Commission's complaint.
The Commission seeks a permanent injunction, disgorgement plus prejudgment interest, and civil penalties against Bujkovsky and disgorgement from Hansen of her ill-gotten gains plus prejudgment interest.
Separately, Bujkovsky pleaded guilty to felony counts of obstruction of justice (for making false statements to Commission staff in connection with the Commission's investigation of MAK 1 and Mohit Khanna) and income tax evasion. United States of America v. Gustav G. Bujkovsky, U.S. District Court for the Southern District of California, case no. 10CR3467LAB (filed Aug. 31, 2010). Mohit Khanna pleaded guilty to felony counts of conspiracy to commit mail and wire fraud (in connection with his role in MAK 1) and filing a false tax return. United States of America v. Mohit Khanna, U.S. District Court for the Southern District of California, case no. 10CR2271LAB (filed June 17, 2010). Bujkovsky and Mohit Khanna are scheduled to be sentenced November 15, 2010.
The Commission acknowledges the substantial assistance of the United States Attorney's Office for the Southern District of California, the United States Postal Inspection Service, and the Federal Bureau of Investigation.
For further information, see Litigation Release Nos. 21306 (November 19, 2009) and 21181 (August 20, 2009) and Administrative Proceedings 34-60891 (October 19, 2009) and 34-61604 (March 1, 2010).
See Also: SEC Complaint