Know When to Run… Don’t Be A Gambler

By G. Kevin Mathis, Investor Advocacy Intern

On February 7, 2019, the Security and Exchange Commission (SEC) charged Robert Alexander (Alexander) with fraudulently raising approximately $9 million.  The SEC complaint alleges that Alexander sold investments on Kizzang LLC defrauding more than 50 individuals.  Alexander allegedly claimed that investment funds would start up his online sweepstakes and fantasy sports entertainment services company.  Instead, Alexander allegedly used the investors’ funds for himself.

Kizzang was allegedly going to be an entertainment company that would revolutionize the sweepstakes business.  The company would allegedly use its innovative proprietary technology and games to bring sweepstakes to gaming entertainment seekers in the 21st century.  The SEC’s complaint states that Alexander made many misrepresentations to potential investors including that they would make a minimum of 10 times their investment, he had personally invested millions of dollars in Kizzang, he made a $50 million charitable donation, and he had contributed to the creation of a prominent video game.  Alexander allegedly told investors that he was allocating the funds he was raising for specific purposes related to Kizzang.  Instead as alleged in the SEC’s complaint Alexander used the “the Kizzang bank accounts, funded almost entirely with investor dollars, as his personal piggybank, misappropriating at least $1.3 million.”  The SEC further alleges that Alexander drove the company vehicle like it was his personal car and failed to disclose material information to investors about his prior legal judgments entered against him.

What did Alexander do with the investment funds?  Allegedly, he had a gambling habit.   Instead of investing in his online gambling venture, the SEC claims he went on personal gambling ventures.  Alexander allegedly spent hundreds of thousands of his investor’s dollars gambling at Las Vegas casinos.  Alexander never learned to walk away, and his potential investors should have run away from the potential investment — guaranteed returns are a red flag that should cause any investor to pause.

Hopefully, the SEC will be able to help investors recover their funds.  The SEC filed its complaint in the U.S. District Court for the Southern District of New York.  It charges Alexander and Kizzang with violating the anti-fraud provisions of the SEC Act and seeks permanent injunctions, civil monetary penalties, and disgorgement of ill-gotten monetary gains plus interest.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced that it was bringing criminal charges against Alexander.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.