6 September 2016
The Oregonian Reported Friday…
Oregon regulators have fined a Happy Valley man for allegedly bilking an investor out of about $80,000 for a bogus marijuana-related enterprise.
The Oregon Department of Consumer and Business Services ordered Todd C. Grange to pay $60,000 in fines for violating state securities law.
It’s the second time the agency has imposed fines in a marijuana-related securities fraud investigation. In July, the state ordered Tisha Siler, CEO of a Northeast Portland pot dispensary called Cannacea, to pay $40,000 in fines for multiple violations of state securities law, including selling securities without a license. Siler appealed the order; the appeal is pending.
In the latest case, the state concluded that Grange took thousands from a Colorado investor for a marijuana business called THC Pharmaceutical, which the state described as a “sham public offering.”
Grange could not be reached for comment. He has a previous theft conviction in Washington state. State documents show the company website offered investors the chance to convert $10,000 into $150,000.
The state also determined that Grange’s claims to have raised $9 million from 27 investors and that the company had been in business for at least five years were false. Investigators concluded that THC Pharmaceutical was never incorporated in Oregon.
“This is a classic case of a fraudster going out there and pitching an investment that is clearly too good to be true using the hot new industry as the hook,” said Jake Sunderland, a spokesman for the agency. “Sometimes it’s oil. Sometimes it’s gold and sometimes it’s silver. In this case, it’s marijuana.”
Grange told the investor, identified in the state file as Jack Salazar of Pueblo, Colorado, that a $25,000 investment would result in about $1 million in shares.
The company, the investor was told, was merging with a publicly traded one. Salazar in 2014 sent money to the bogus company’s Milwaukie mailing address, according to the state’s order. The investor “never received any shares in any entity affiliated with THCP.”
“In fact, there is no evidence whatsoever that THCP planned to merge with any publicly traded company,” the order states. “What is more, such a merger would be impossible because THCP did not exist.”
A state investigator, Chris Aldrich, concluded that the company was essentially “a pyramid scheme wherein persons are enticed by high returns that will be paid within a very short period of time.”
“There is no evidence to support that THCP is anything but an internet website which solicits funds,” Aldrich wrote in an affidavit included in the state’s file.
The state can issue a proposed order spelling out the wrongdoing and imposing a fine. The parties can either negotiate a resolution, which typically involves agreeing to a set of findings and paying a fine and restitution, or the case goes before an administrative law judge.
In this case, Grange appealed the state’s order but then dropped out of the process, officials said. Restitution to victims can only be included in a negotiated settlement.
State officials encouraged other investors who gave money to Grange for the business to contact the Department of Consumer and Business Services at 866-814-9710.