The SEC’s amended complaint alleges that Collectors Café and Kontilai attempted to resolve investor allegations of wrongdoing by conditioning the return of investor money on the investors signing agreements prohibiting them from reporting potential securities law violations to law enforcement, including the SEC. According to the complaint, these agreements violate the SEC’s whistleblower protection rules. The complaint alleges the defendants went so far as to sue two investors that they believed breached one of the illegal agreements. Following the filing of the SEC’s action in May 2019, the defendants allegedly have continued to misrepresent to investors material facts about Collectors Café’s business and the reasons why Kontilai took money from the company for personal expenses, including continuing to tell investors that he loaned Collectors Café millions of dollars in the late 2000s when, in reality, he never lent the company the amounts that he claims.
via SEC.gov | SEC Charges Issuer and CEO with Violating Whistleblower Protection Laws to Silence Investor Complaints.