The Securities and Exchange Commission today charged Robert Alexander with fraudulently raising approximately $9 million from more than 50 individuals by selling investments in Kizzang LLC, a purported online gaming business.
According to the SEC's complaint, among other misrepresentations, Alexander told investors that they would make a minimum of 10 times their investment, Alexander had personally invested millions of dollars in Kizzang, Alexander had made a $50 million charitable donation, and that he had led the creation of a prominent video game. Rather than using investor funds for Kizzang's business, Alexander stole at least $1.3 million, including spending more than $450,000 on gambling sprees. Alexander also used investor funds to finance his daily living and other personal expenses, including credit card bills, shopping and entertainment, and expenses for his daughter, including culinary school tuition and luxury car payments.
"As alleged in our complaint, Alexander promoted Kizzang as an opportunity for investors to profit from the early success of a technology start-up," said Carolyn Welshhans, Associate Director in the SEC's Division of Enforcement. "In reality, Alexander brazenly converted investor proceeds for his personal use, sometimes within days of receiving investor funds."
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charges Alexander and Kizzang with violating the anti-fraud provisions of the Securities Act and Exchange 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 today announced criminal charges against Alexander.
The SEC's investigation was conducted by Cecilia B. Connor and Andrew Elliott, and supervised by Ms. Welshhans and Amy L. Friedman, with assistance from Janet Yang. The SEC's litigation will be handled by Martin Healey. The SEC appreciates the assistance of the Federal Bureau of Investigation and the U.S. Attorney's Office for the Southern District of New York.