A Las Vegas resident, 55-year-old Mykalai Kontilai (formerly Michael Contile), has been sentenced to 51 months in prison and ordered to pay $6.1 million in restitution for orchestrating a significant investment fraud scheme. Kontilai, the CEO of Collector’s Coffee Inc. (also known as Collector’s Café), defrauded investors between 2012 and 2018, according to the U.S. Department of Justice. His deceptive tactics involved promising investors the imminent launch of an online auction platform for collectibles, including sports and Hollywood memorabilia. This alluring prospect successfully raised approximately $23 million from unsuspecting investors.
However, Kontilai’s promises were a facade. He embezzled approximately $6.1 million of the raised funds for personal enrichment, including the purchase of luxury goods, multiple apartments, and high-end vehicles. The Securities and Exchange Commission (SEC) launched an investigation into Kontilai’s activities around 2017, uncovering his attempts to obstruct justice by forging documents and providing false testimony under oath. Facing charges in both Nevada and Colorado, Kontilai fled to Russia, only to be apprehended in Germany in 2023 on an Interpol Red Notice. Extradited back to the United States in May, he pleaded guilty on November 21st to one count of wire fraud. As part of the plea agreement, the Colorado case against him was dismissed.
This case highlights the significant risks associated with investment schemes and the lengths to which perpetrators will go to conceal their fraudulent activities. The substantial prison sentence and restitution order serve as a stark warning to others considering similar actions. The prosecution’s success underscores the importance of thorough investigation and international cooperation in bringing fraudsters to justice. Kontilai’s evasion of justice by fleeing to Russia also underlines the challenges faced by law enforcement in prosecuting complex, cross-border financial crimes.
In a separate but related development, the SEC filed settled charges against Kiromic BioPharma, Inc. (KRBP), its former CEO Maurizio Chiriva-Internati, and its former CFO Tony Tontat. The charges stem from their failure to disclose material information regarding two cancer-fighting drug candidates before, during, and after a $40 million follow-on public offering in July 2021. Two weeks prior to the offering, the Food and Drug Administration (FDA) placed the drug candidates on clinical hold, a critical piece of information that was withheld from investors. This omission violated securities regulations, as the company had previously acknowledged the hypothetical risk of a clinical hold and its potential negative impact.
Kiromic BioPharma, Tontat, and Chiriva-Internati all agreed to settle the SEC’s charges. While Kiromic avoided a civil penalty due to self-reporting, cooperation, and remediation efforts, Chiriva-Internati and Tontat were fined $125,000 and $20,000 respectively. Eric Werner, Director of the SEC’s Fort Worth Regional Office, stated that the settlements found the right balance between holding the executives accountable for disclosure failures and recognizing Kiromic’s proactive cooperation with the investigation. These settlements send a strong message that transparency and accurate disclosure in financial reporting are paramount in maintaining investor confidence and complying with securities laws. The SEC’s actions demonstrate a continued commitment to holding companies and their executives accountable for misleading investors.
