CEO Busted For Suing Whistleblowers

In an amended complaint, the SEC alleges that CEO Mykalai Kontilai of Collectors Cafe used settlement agreements with investors that illegally prohibited them from complaining to authorities about alleged fraud. The agency had previously sued Kontilai for making false statements and misappropriating more than $6 million. Kontilai required investors in his memorabilia auction business who wanted money back to warrant that they hadn’t complained to any law enforcement authorities about potential securities law violations and wouldn’t complain in the future. That violates the SEC’s whistleblower protection rules. According to the SEC Kontilai and Collectors Café “went so far as to sue two investors that they believed breached one of the illegal agreements.” They sought punitive and compensatory damages and “then flaunted to other investors the fact that they had sued investors for communicating with the SEC,” the complaint said. Kontilai told investors he didn’t take any salary, but according to the SEC he diverted $6 million from the company to rent on an oceanfront condo in Miami, pay tuition at a private school in Las Vegas, and expenses at gentleman’s clubs and a luxury resort.