A former metro Detroit commercial real estate executive who swindled investors in sham deals to fuel a yearslong lottery addiction will spend 53 months in federal prison.
Viktor Gjonaj, 44, who founded the now-defunct Imperium Group LLC real estate company, said he didn’t have anything to say when Judge Linda Parker asked him if wanted to address the court about the scheme that investigators believe resulted in millions of dollars lost by investors who thought they were investing in real estate with him.
Instead, Gjonaj poured their investments into his gambling binge, which at times reached $1 million a week in Daily 3 and Daily 4 Michigan Lottery play.
“This is a lot of money and a lot of harm to many victims,” Karen Reynolds, the federal prosecutor on the case, said in court Wednesday afternoon. “I cannot argue with the fact that Mr. Gjonaj was within the throes of a serious gambling addiction but it does not obfuscate from the fact that … this defendant completed a fairly sophisticated fraud.”
His defense attorney, Steve Fishman, said in court that Gjonaj has taken responsibility for his crime and noted Gjonaj’s gambling problem.
“Those casinos don’t care. The lottery commission doesn’t care. If you want to gamble away every penny you have and that you can steal, you can do it,” Fishman said in court. “I think this is a man who really, truly accepts responsibility for his conduct.”
Fishman said Gjonaj “is very relieved the process is finally over and he can serve his time and return to polite society.”
A recommendation will be made that he serve his sentence in Morgantown, W. Va. It’s not yet known when he will report to prison.
After Gjonaj completes his sentence, he’ll be required to enter drug, alcohol and mental health programs.
One of his victims, Nol Lleshaj, was present in court but declined comment after the sentencing.
Gjonaj had been scheduled for sentencing Aug. 31 but that was postponed until Wednesday because “new information regarding this case has recently been brought to light.” A spokesperson for the U.S. Attorney’s Office said that new information was regarding the “restitution and/or loss amount.”
The saga, details of which started to trickle out two years ago, involved the implosion of his company, a wild incident in an Ann Arbor hotel, lottery terminals rumored to be dedicated to feeding his near constant play, addiction and long-rampant speculation of Gjonaj’s whereabouts as lawsuits mounted seeking millions in lost investor money and he was nowhere to be found.
In August, Fishman argued that a 30-month sentence would be more appropriate instead of the 78-97 months established by the court or the 63-78 months established by the probation department due to the circumstances of the case. The discrepancy between the sentencing recommendations is based on the number of victims who could be identified.
“Because of the unusual nature and circumstances of the offense, the history and characteristics of Mr. Gjonaj including his gambling addiction, the fact that he turned himself in to government agents in August 2019, confessed his crime to them, and pled guilty at the earliest possible opportunity, defense counsel contends that a sentence well below the sentencing guideline range would be appropriate in this case,” Fishman wrote.
In addition, Fishman’s filing also says that Gjonaj “hopes to remain in the real estate field after serving his sentence in this case.”
Gjonaj agreed to a forfeiture of approximately $19 million, which is the amount he gained after paying investors from his lottery winnings.
His victims getting any of their money back is likely to be difficult.
“Mr. Gjonaj is broke and his family is in distress because of it,” Fishman said in court.
The former commercial real estate executive was accused in January of bilking at least two dozen investors in 66 sham real estate deals of $26.4 million, with none of the deals ever materializing as he used the funds to play the Michigan Lottery. However, the precise amount he obtained from victims has been fluctuating since.
Federal prosecutors in January said Gjonaj told his investors that he would use their money to buy, develop and resell real estate at a profit, although a specific rate of return was not promised.
In a March virtual court proceeding, Gjonaj said he became addicted to gambling at some point in 2016 and by 2017 he began losing a large amount of money.
Gjonaj then conceded that he devised a scheme to obtain money to gamble by seeking investments in nonexistent real estate deals.
He won no less than $28 million playing at various Michigan Lottery retailers around Southeast Michigan, but primarily centered in Macomb County, where he lived.
After rising through the ranks of the local commercial real estate industry as a broker specializing in Macomb County and retail, Gjonaj formed Imperium Group in October 2017, four months after he won a $2.5 million prize playing the Daily 3 and Daily 4 games.
Less than a month after incorporating Imperium, he won another $4 million.
Gjonaj’s winning streak continued into early 2018, with a $10 million payday on Jan. 29, a $9.625 million payday on Feb. 27 and another $2 million March 17 that year. But by the summer 2019, his luck changed, eventually leading to the implosion and mass resignation of his real estate company’s staff after he stopped showing up to work.
Although Gjonaj continued to win large cash prizes, his former associate Gregory Vitto said in September 2019 testimony in Oakland County Circuit Court that they were not nearly the amounts that he had previously won.
Some of the party stores that sold Gjonaj the lottery tickets have been sued in Oakland County Circuit Court. The plaintiffs in the case are investors Jerome Masakowski and Kris Krstovski, who were awarded a $6.13 million judgment in 2019 in a separate but related lawsuit against Gjonaj.
Seven other investors since August 2019 have sued him in separate cases in Oakland County Circuit Court.
The complaint says the stores gave Gjonaj “gifts of jewelry, automobiles (and) vacations” and had Michigan Lottery “tickets machines in their stores dedicated solely to” him.
The lawsuit claims the stores aided and abetted fraud; aided and abetted a breach of fiduciary duty; aided and abetted statutory stealing; committed a civil conspiracy; unjustly enriched themselves; made fraudulent transfers; and committed negligence.
Most of the allegations were tossed out in court in September 2020. Those dismissed were aiding and abetting fraud; aiding an abetting a breach of fiduciary duty; aiding and abetting statutory stealing; civil conspiracy; unjust enrichment; and negligence.
Picolo’s Liquor & Deli in Shelby Township was the alleged epicenter of Gjonaj’s gambling spree.
No other Macomb County lottery retailer comes close to replicating the prolific nature of Picolo’s Daily 3 and Daily 4 operation, which sold more than $30 million worth of tickets for the two games since fiscal year 2014, according to state records.
In response to Gjonaj’s Daily 3 and Daily 4 play, the Michigan Lottery took the unprecedented step of limiting lottery terminals in 2018 to $5,000 in play per day.
Instead of slowing down as intended, he seemed to have attempted to ramp up his play. Gjonaj allegedly recruited at least one person, Vitto, to work for him full time — ultimately with a job description that only ended up being to play the lottery.
To get around the $5,000 limit, Vitto went about establishing what he described in court testimony as a small network of Macomb County party stores at which he would play Daily 3 and Daily 4 to the tune of $80,000 a day for months.
Vitto also suggested there were others who played on Gjonaj’s behalf.