Gary Dragul‘s company previously owned the Happy Canyon Shopping Center along Hampden Avenue in southeast Denver. (BusinessDen illustration)
Real estate investor Gary Dragul, who pleaded guilty to securities fraud over the summer, has agreed to pay $850,000 to a receiver who accused him of running a Ponzi scheme.
Last week’s agreement winds down the last of Dragul’s legal cases, five-and-one-half years after they began, though he is still scheduled to serve four months in a Centennial jail next year. The settlement also brings his restitution total to $1.85 million for the year.
Dragul, 61, once had considerable real estate holdings in the area, including downtown’s Writer Square and the Happy Canyon Shopping Center in southeast Denver, through his company GDA Real Estate Services, while living in a 12,000-square-foot Cherry Hills mansion.
That all began to unravel in 2018, when he was indicted on nine counts of securities fraud, and in 2019, when he was indicted on an additional five counts. A Denver judge appointed a receiver, Harvey Sender, to run Dragul’s personal estate and GDA Real Estate.
Then, in early 2020, Sender sued Dragul and a list of other defendants, claiming that “by 2007 and continuing through 2018, Dragul was operating his entire business enterprise as a Ponzi scheme.” Sender sought a jury trial with hopes of recovering millions for investors.
Dragul reached a deal with prosecutors in the two criminal cases this June, minutes before a jury trial was to begin in Centennial. He was sentenced in September to eight months of house arrest, four months in the Arapahoe County Jail and $1 million in restitution.
The civil case brought by Sender was scheduled to end in a three-week trial this October and November. Instead, Dragul has agreed to pay $850,000 to Sender by this time next year. If he doesn’t, the amount will increase to $1 million, according to court filings.
But the trial hasn’t been canceled entirely. One defendant, Marlin Hershey, has not reached a settlement with Sender and is scheduled to be at the defense table Monday. The trial is now scheduled to run one week rather than three, ending with a jury verdict by Friday.
Sender accuses Hershey of collecting $3.5 million in illegal referral fees and commissions “from each investment made in Dragul’s fraudulent scheme” without disclosing them to investors. Hershey, of North Carolina, is also awaiting sentencing in an unrelated criminal case.
It remains to be seen how much of Dragul’s $850,000 payment will go to investors who lost money with GDA Real Estate. Dragul has been outspoken in his criticisms of Sender, who he accuses of squandering money on lawyers and himself rather than repaying investors.
“The alleged losses suffered by investors were caused by the receiver because (Sender) failed to understand the GDA business when appointed as a receiver, causing the GDA entities to lose more than $4 million,” Dragul’s attorneys claimed in a court filing Oct. 13.
Sender has paid himself $540,000 from the Dragul estate and GDA since 2018, according to his receiver reports, while paying $2 million to lawyers and $1 million to accountants. Sender has said that he is waiting for the legal cases to end before sending cash to investors.
Sender did not respond to questions about that timeline and the receivership. His attorneys are Patrick Vellone, Averil Andrews, Matthew Wolf and Michael Gilbert with Allen Vellone Wolf Helfrich & Factor in Denver, who also did not return requests to discuss the matter.
Dragul and his attorneys declined to comment on the case as well. He has been represented by Tyrone Glover of Tyrone Glover Law in Denver, along with Benjamin Reiss and Kristin Drecktrah Paz from the Florida law firm Perlman Bajandas Yevoli & Albright.
Gary Dragul‘s company previously owned the Happy Canyon Shopping Center along Hampden Avenue in southeast Denver. (BusinessDen illustration)
Real estate investor Gary Dragul, who pleaded guilty to securities fraud over the summer, has agreed to pay $850,000 to a receiver who accused him of running a Ponzi scheme.
Last week’s agreement winds down the last of Dragul’s legal cases, five-and-one-half years after they began, though he is still scheduled to serve four months in a Centennial jail next year. The settlement also brings his restitution total to $1.85 million for the year.
Dragul, 61, once had considerable real estate holdings in the area, including downtown’s Writer Square and the Happy Canyon Shopping Center in southeast Denver, through his company GDA Real Estate Services, while living in a 12,000-square-foot Cherry Hills mansion.
That all began to unravel in 2018, when he was indicted on nine counts of securities fraud, and in 2019, when he was indicted on an additional five counts. A Denver judge appointed a receiver, Harvey Sender, to run Dragul’s personal estate and GDA Real Estate.
Then, in early 2020, Sender sued Dragul and a list of other defendants, claiming that “by 2007 and continuing through 2018, Dragul was operating his entire business enterprise as a Ponzi scheme.” Sender sought a jury trial with hopes of recovering millions for investors.
Dragul reached a deal with prosecutors in the two criminal cases this June, minutes before a jury trial was to begin in Centennial. He was sentenced in September to eight months of house arrest, four months in the Arapahoe County Jail and $1 million in restitution.
The civil case brought by Sender was scheduled to end in a three-week trial this October and November. Instead, Dragul has agreed to pay $850,000 to Sender by this time next year. If he doesn’t, the amount will increase to $1 million, according to court filings.
But the trial hasn’t been canceled entirely. One defendant, Marlin Hershey, has not reached a settlement with Sender and is scheduled to be at the defense table Monday. The trial is now scheduled to run one week rather than three, ending with a jury verdict by Friday.
Sender accuses Hershey of collecting $3.5 million in illegal referral fees and commissions “from each investment made in Dragul’s fraudulent scheme” without disclosing them to investors. Hershey, of North Carolina, is also awaiting sentencing in an unrelated criminal case.
It remains to be seen how much of Dragul’s $850,000 payment will go to investors who lost money with GDA Real Estate. Dragul has been outspoken in his criticisms of Sender, who he accuses of squandering money on lawyers and himself rather than repaying investors.
“The alleged losses suffered by investors were caused by the receiver because (Sender) failed to understand the GDA business when appointed as a receiver, causing the GDA entities to lose more than $4 million,” Dragul’s attorneys claimed in a court filing Oct. 13.
Sender has paid himself $540,000 from the Dragul estate and GDA since 2018, according to his receiver reports, while paying $2 million to lawyers and $1 million to accountants. Sender has said that he is waiting for the legal cases to end before sending cash to investors.
Sender did not respond to questions about that timeline and the receivership. His attorneys are Patrick Vellone, Averil Andrews, Matthew Wolf and Michael Gilbert with Allen Vellone Wolf Helfrich & Factor in Denver, who also did not return requests to discuss the matter.
Dragul and his attorneys declined to comment on the case as well. He has been represented by Tyrone Glover of Tyrone Glover Law in Denver, along with Benjamin Reiss and Kristin Drecktrah Paz from the Florida law firm Perlman Bajandas Yevoli & Albright.
