Got Cannabis? Then Got Scammed!
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Is sin a good investment? Many believe sin is popular in both good times and bad. And with several states adopting some form of legalized marijuana, we face unchartered territory in investments, commercial litigation and commercial transactions.
Set aside the morality issues to explore one unintended consequence of legalizing pot—investment fraud. According to an SEC Investor Alert in September 2018:
Cannabis Stock Scams
“Scam artists often exploit “hot” industries to trick investors, including by making false promises of high returns with low risks. …OIEA [Office of Investigation, Education and Advocacy] regularly receives complaints about marijuana-related investments, and the SEC continues to bring enforcement actions in this area. ….”
Stopping Cannabis Fraud
The SEC recently filed one such fraud case against Michael Cone of McKinney Texas, also known as, Brian Gwinn, and Greenview Investment Partners, LP. In less than nine months Cone and his team duped 60 investors in 26 states out of investments with a minimum buy in of $50,000. The complaint alleges that Cone and Greenview “misappropriated 3.3 million dollars. See SEC Complaint .
According to the complaint, Cone and Greenview lied to prospects by telling them to expect a 24% annual return on investment. Greenview’s management team purportedly had ten years of profitable investments of $100 million in the cannabis industry, and 200 investors benefitted from their high rate of return. SEC Press Release.
“Cone used an alias to conceal his prior criminal convictions [and] lied about having a former agent from the U.S. Drug Enforcement Administration on staff… [I]n reality, Greenview had no track record and its sole investment of $400,000 was in a cannabis company that had yet to harvest a crop.” SEC Press Release.
From Delivery Guy to Owning a Bentley and a Rolls Royce.
One thing was true. Cone had a familiarity with the marijuana trade. “Prior to founding Greenview in 2017, Cone was arrested and pled guilty to multiple crimes, including felony delivery of marijuana, theft, DUI, and misdemeanor forgery and assault. Cone is not registered in the securities industry in any capacity.” SEC Complaint.
The FBI seized $1.4 million of assets including a 2017 Bentley Flying Spur and a 2015 Rolls Royce Wraith. Not to be discouraged by a little criminal seizure, Greenview continued to raise another $400,000 post seizure. SEC Complaint.
When investing your money, take your time and do your research. We hope your due diligence pays you great dividends. And, whenever you find yourself in need of a commercial lawyer or a breach of contract attorney we are ready to help.