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U.S. Securities and Exchange Commission


Litigation Release No. 20122 / May 18, 2007

SEC v. Empire Development Group, et al., 07 CIV 3896 (S.D.N.Y.)

SEC Announces Emergency Action to Halt Ongoing Fraud Against Senior Citizens

SEC Obtains Temporary Restraining Orders, Asset Freezes, and Accountings

On May 18, 2007 the Securities and Exchange Commission filed an emergency action against Felix Strashnov, a/k/a Felix Straton, and Michael Ayngorn, and three entities they controlled to halt an ongoing fraud in which the defendants claim to have raised nearly $2 million. The defendants used high pressure sales tactics and cold-calling to sell unregistered securities of bogus real estate development companies, to unsuspecting investors, including elderly people with limited means.

The Commission's complaint, filed in the Southern District of New York, charges the defendants, Felix Strashnov, a/k/a Felix Straton, Michael Ayngorn, Castle Hill Ventures, Empire Development Group Fund I LLC, and Empire Development Group LLC, with making fraudulent solicitations, conducting an unregistered offering, and misappropriating investor funds. The Honorable P. Kevin Castel granted the Commission's request for emergency relief and issued temporary restraining orders freezing the defendants' assets, requiring them to provide accountings, and prohibiting them from committing future violations of the securities laws. The Commission's complaint also seeks a final judgment assessing civil penalties and ordering the defendants to disgorge their ill-gotten gains.

The complaint also alleges that the defendants made numerous misrepresentations about the assets, operations and future prospects of the companies, including claims that:

  • Empire was purchasing, renovating, and reselling real estate properties;
  • Revenues were projected to exceed $40 million within 5 years;
  • Investors would be able to obtain every penny of their money back; and
  • Empire would shortly conduct an initial public offering of its securities.

Rather than using funds raised from investors to purchase and develop investment properties for resale, Straton and Ayngorn purchased personal residences, held in their own names rather than in Empire's name. Empire appears to have no properties, assets, or revenue other than funds raised from investors. Empire has taken no steps to conduct an initial registered public offering of its securities.

The Commission's investigation is continuing.

SEC Complaint in this matter



Modified: 05/18/2007