Securities fraud charges filed against Wichita developers

WICHITA, Kansas – Kansas Securities Commissioner Josh Ney has announced that criminal charges have been filed by his office against Michael Elzufon and David Lundberg in Sedgwick County District Court.

Elzufon and Lundberg were each charged with 61 felony counts under the Kansas Uniform Securities Act for allegedly committing securities fraud and selling unregistered securities. The criminal complaint alleges that Elzufon and Lundberg committed securities fraud by unlawfully employing a scheme to defraud at least one Kansas resident and an additional 59 residents from other states by offering and selling unregistered securities in their various businesses, which they claimed was for the rehabilitation of various downtown Wichita offices. The alleged victim losses currently total over $3.5 million.

Ney urges anyone with information regarding any promissory note or other investment offered by these individuals to contact the Office of the Kansas Securities Commissioner at 785-296-3307.

The violations listed in the complaint are allegations. Elzufon and Lundberg should be presumed innocent until proven guilty.

When the developers known as the “Minnesota Boys” arrived in Wichita in 2004 they had big visions for some of the city’s downtown real estate. But fast forward to 2015 and most of the 11 properties once owned by the developers have been sold off.

Five years ago the council approved a plan to give the developers $10.3 million worth of incentives to renovate Exchange Place. According to the city’s legal department the deal was never finalized and the city did not pay Real Development for that deal. The city did, however give them $2.7 million for facade improvements on several buildings. City leaders insist they will re-coup that money through tax collections on the buildings, despite who owns the buildings.

KSN tried to get a complete list of the charges and the victims but a spokesperson for the Securities Commissioner in Kansas says those documents are sealed by a judge and won’t be available until the duo makes their first court appearance in Sedgwick County. That court date has not yet been set.

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