Parking REIT’s Michael Shustek in the News Again
July 2, 2018 | James Sprow | Blue Vault
On June 7, Blue Vault published an item about The Parking REIT’s changes to its CFO position and to its Board of Directors. We also described the failure of the REIT to file a 10-K for 2017 and a 10-Q for Q1 2018. The REIT recently filed its 10-K for 2017, and now The Las Vegas Review-Journal has reported on further developments at both The Parking REIT and at Michael Shustek’s two Vestin funds, Vestin Mortgage Realty I and II that he created in the 2000s to invest in mortgages.
FINRA is investigating whether Shustek’s brokerage violated federal securities laws or the authority’s rules when it raised money from investors from 2012 to 2017 according to the firm’s 10-K SEC filing on June 22.
According to the 10-K:
| “The Financial Industry Regulatory Authority, Inc. (“FINRA”) is currently conducting an investigation of MVP American Securities (“AMS”), a firm that was previously a registered broker-dealer. AMS is indirectly owned by Michael Shustek, our Chairman and Chief Executive Officer, who was also a registered principal of AMS. AMS, acting primarily in a wholesaler capacity, participated in the sale of our shares in connection with our initial public offering and in connection with the initial public offering of MVP REIT I. FINRA has stated that the investigation is to determine if there have been violations of the federal securities laws or the rules of FINRA and other self-regulatory organizations. However, FINRA has not identified the specific potential violations that are the focus of the investigation.” |
In reporting on Shustek’s past, the newspaper article mentions the purchase and sale of the same six Las Vegas commercial buildings three times between 2013 and 2016 by Shustek’s Vestin funds. According to the report, the third transaction resulted in a $9.2 million loss for investor’s in Shustek’s two Vestin funds, excluding commissions and closing costs.
The Las Vegas Review-Journal article gives additional background on Shustek and his Vestin funds, including the assertion that the funds have lost nearly $180 million since their founding and had $22 million in equity remaining as of March 30. Vestin Realty Mortgage I, Inc. had $11.3 million in total assets as of December 31, 2017, down from $13.1 million in 2015. Vestin Realty Mortgage II, Inc. had $35.4 million in total assets, down from $54.4 million in 2015.
The news surrounding Shustek certainly had interesting effects on the OTC pricing of Vestin Realty Mortgage I and II, both OTC stocks. Vestin Realty Mortgage I traded at $4.03 on June 29 after trading at less than $2.00 per share on June 5. Vestin Realty Mortgage II traded at $2.10 on June 7 and recovered to $4.10 on June 21. Do those purchasing these shares know something about the FINRA investigation and its possible outcome? Again, we have to ask, “What’s going on?”
Sources:
Parking REIT Replaces CFO and Leaves Blue Vault Wondering “What’s Going On?”
Form 10-K, for the fiscal year ended December 31, 2017
SECURITIES EXCHANGE ACT OF 1933, Release No. 8744, September 27, 2006
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Parking REIT Replaces CFO and Leaves Blue Vault Wondering “What’s Going On?”
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