Sports auction site faces new charge for allegedly silencing investors

By James Langton | November 4, 2019 | Last updated on November 4, 2019
1 min read
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The U.S. Securities and Exchange Commission (SEC) has filed an amended complaint against Collectors Café Inc., an online sports memorabilia auction portal, and its CEO, Mykalai Kontilai, alleging that they tried to prevent investors from reporting to the SEC and other U.S. government agencies.

Both the company and Kontilai already face charges from the SEC for allegations that they carried out a fraudulent US$23 million securities offering, and that Kontilai misappropriated more than US$6 million of investors’ money. These allegations have not been proven.

The SEC has now added to those charges, alleging that Collectors Café and Kontilai required investors to sign agreements prohibiting them from reporting potential securities law violations as a condition of getting money back from the firm. The SEC said that such agreements violate its whistleblower protection rules.

This latest allegation has not been proven either.

“We allege that the defendants attempted to cover up their fraud by holding investors’ money hostage until the investors signed agreements preventing them from seeking law enforcement intervention,” said Kurt Gottschall, director of the SEC’s Denver office, in a statement.

“The SEC’s whistleblower protections broadly protect not just employees, but anyone who seeks to report potential securities law violations to the commission,” said Jane Norberg, chief of the SEC’s Office of the Whistleblower.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.