Dragul Receivership

On August 30, 2018, Harvey Sender was appointed as the Receiver for Gary J. Dragul, GDA Real Estate Services, LLC, GDA Real Estate Management, LLC, and their respective properties and assets, and interests and management rights in related affiliated and subsidiary businesses (the “Receivership Estate” or the “Estate”). This website is maintained by Harvey Sender in his capacity as Receiver.  The purpose of the site is to provide selected pleadings, documents, key dates, and status reports to interested parties regarding this matter. Neither the Receiver nor his counsel can or will provide legal advice to creditors, investors, or other interested parties. As the Dragul Receivership proceeding is a complex legal matter, all parties are encouraged to retain and consult with their own legal counsel and accountants regarding this matter.

 

Current Status Re: Distributions [Posted 12/9/2024]

There are several issues preventing the Receiver from closing the Receivership Estate and making distributions.

First, pursuant to a Settlement Agreement reached with Gary Dragul in October 2023, Mr. Dragul was obligated to pay the receivership estate $850,000 by October 25, 2024. Mr. Dragul failed timely to make the payment and failed to cure his default within 30 days as allowed by the Settlement Agreement. On November 26, 2024, the Receiver therefore asked the court in the Insider Case to enter a stipulated judgment against Dragul for $999,999.99. Dragul has been given until December 12 to respond. The Receiver anticipates judgment will enter against Dragul before the end of 2024 and anticipates pursuing collection efforts against Dragul thereafter.

Second, the Receiver settled the estate’s claims against the Clearwater bankruptcy estates in March 2024. A single investor, Chad Hurst, objected to the approval of that agreement, which would bring an additional $500,000 into the estate. The parties continue to litigate the issue and a hearing is scheduled in the Receivership Court for January 31, 2025.

Third, the Receiver is continuing efforts to collect on the $14.7 million judgment obtained against Marlin Hershey in 2023 through enforcement proceedings in North Carolina. The Receiver will continue those efforts and/or investigate a potential sale of that judgment.

Despite these pending issues, the Receiver anticipates filing a proposed distribution plan in the first quarter of 2025 and will recommend to the Receivership Court that he be permitted to make interim distributions.

On April 12, 2018, Gary J. Dragul was indicted on nine counts of Securities Fraud for soliciting funds from investors in GDA entities.  The Indictment may be found here:

Click to see indictment

On March 1, 2019, Gary Jule Dragul was indicted on five counts of Securities Fraud for soliciting funds from investors in GDA entities.  The second Indictment may be found here:

Click to see second indictment

You may read an article posted on the Colorado State’s website regarding the second indictment here:

https://www.colorado.gov/pacific/dora/gary-dragul-second-indictment-securities-fraud

DRAGUL CRIMINAL TRIAL: On June 5, 2023, moments before Gary Dragul’s 8-day criminal trial was scheduled to start in Arapahoe County District Court, Dragul pleaded guilty to two counts of securities fraud in a deal reached with prosecutors.  Dragul’s plea agreements in Case 2018CR1092 and Case 2019CR610 call for him to spend a total of 120 days in Arapahoe County Jail, pay $1 million in restitution, serve eight months of house arrest, spend a decade on Economic Crime Probation, and complete 200 hours of community service.  Also, as a material condition of the plea agreement, Dragul agrees to actively cooperate with Receiver Harvey Sender to facilitate an amicable resolution to any remaining litigation in the Dragul Receivership.  Dragul will be formally sentenced on September 15^th.

Please click on links below for the two Plea Agreements, and to read an article published on Business Den.

Plea Agreement – People v. Dragul 2018cr1092

Plea Agreement – People v. Dragul 2019cr610

06 06 2023 BusinessDen Article – Gary Dragul pleads guilty

INSIDER CASE: Case No. 2020CV30255 – As a material condition of the criminal plea agreements, Dragul agrees to actively cooperate with Receiver Harvey Sender to facilitate an amicable resolution to any remaining litigation in the Dragul Receivership.    The case is currently scheduled for a 4-week jury trial to begin October 23, 2023.

MARLIN HERSHEY:  A federal grand jury has returned a criminal indictment against Marlin Hershey.  On April 22, 2022, the indictment was unsealed following Hershey’s appearance in court in North Carolina.  Find the news release at:  https://www.justice.gov/usao-wdnc/pr/two-men-are-facing-federal-charges-connection-multi-million-dollar-investment-scheme

HERSHEY CRIMINAL TRIAL:  Marlin Hershey pleaded guilty to security-fraud and related charges on June 1, 2023 in U.S. District Court in North Carolina.  He will be formally sentenced at a later date.

Please click on this link to read the June 1, 2023 United States Attorney’s Office press release regarding Marlin Hershey’s guilty plea.

 

2020 Tax Update: The Receiver has decided to collapse the Estate entities. As a result, most Estate investments filed final tax returns for the 2018 reporting year and most investors in Estate properties received final K-1’s in September 2019.  The Estate will not be issuing additional K-1s to those investors. The Receiver is still liquidating and/or disposing of assets of the Estate, which includes real property and litigation claims seeking to recoup funds from a variety of individuals and entities. As this process is ongoing, we are unable, at this time, to advise when or how much money will ultimately be distributed to creditors of the Estate. Claimants receiving distributions from the Estate will be issued a 1099 for the year in which distributions are made. We appreciate your patience and cooperation throughout this process.  At this time, no reasonable estimate can be made as to future recoveries or their treatment for tax purposes.

September 16, 2019 update: 2018 K-1s for Estate investments have been placed in the mail.  If you believe you should have received one but did not, please contact us.  At present, the Receiver is still in the process of liquidating the assets of the Receivership Estate, which includes not only real property, but also litigation claims seeking to recoup funds from a variety of individuals and entities. As this process is ongoing, we are unable, at this time, to advise when or how much money will ultimately be distributed to creditors of the Receivership Estate.  We appreciate your patience and cooperation throughout this process.  The 2018 tax returns contain both pre- and post- Receivership activity, and have been extended.  The Receiver and his team are presently analyzing the activity to be included in the 2018 tax returns. 

At this time, no reasonable estimate can be made as to future recoveries or their treatment for tax purposes.