Cannabis company American Patriot Brands has been charged with fraud.
The complaint filed by the Securities and Exchange Commission (SEC) also names the company’s CEO, two current and former executives, and subsidiaries DJ&S Property #1 LLC, TSL Distribution LLC and Urban Pharms LLC, the SEC said in a Thursday (March 16) press release.
“As the SEC complaint alleges, American Patriot Brands Inc. and some of its senior executives fabricated business profits and prospects to entice investors with falsehoods that in the end left investors with essentially worthless securities,” Carolyn M. Welshhans, associate director of the SEC’s enforcement division, said in the release.
The SEC complaint alleges that those who have been charged made false and misleading statements to investors, put millions of dollars of investor proceeds in the executives’ personal accounts and spent tens of thousands of dollars on their personal expenses, according to the press release.
The scheme was underway since at least mid-2016 and involved raising $30 million from more than 100 investors, the release said.
The false and misleading statements made to investors involved the company’s financial condition, the scope of its operations, the value of its Oregon cannabis farm, the safety and security of investing in the company, and other aspects of the company, per the release.
“This action reflects the SEC’s ongoing commitment to holding accountable those who seek to profit through lies and deception,” Welshhans said in the release.
In another recent SEC action, the agency charged the company and founder behind the cryptocurrencies TerraUSD and Luna with defrauding investors.
The SEC said in February that its charge against Singapore-based Terraform Labs and Do Hyeong Kwon alleges that they marketed crypto assets securities to investors seeking to earn a profit while misleading them about the value and stability of their products.
The complaint centered on the Gemini Earn crypto asset lending program, through which Gemini and Genesis drew hundreds of thousands of investors who weren’t provided necessary information, the SEC said at the time.