MJ Biz write
Wall Street regulators filed civil fraud charges against a company and four people allegedly caught up in a scheme to bilk investors out of nearly a million dollars through a company purported to be a Massachusetts medical cannabis venture.
The Securities and Exchange Commission charged that the head of the operation raised $550,000 from investors between 2011 and 2012 through a Denver company, Lionshare Ventures, the Boston Globe reported. The man used the money for unauthorized expenses like groceries and pet care, the SEC said.
He also allegedly used the money to take control of a firm called Cannabiz Mobile Inc., a penny stock, and between 2012 and 2015 the four individuals sold shares of the company – touted as a medical cannabis company – and filed false statements with the SEC.
Cannabiz investors eventually lost nearly $1 million, according to the charges, the Globe reported.
The charges could serve as a warning to potential cannabis industry investors, given that the vast majority of public marijuana companies trade on over-the-counter market or as penny stocks, like Cannabiz.
The allegations also indicate that regulators are keeping an eye on public marijuana companies, and that the companies will probably be held to the same – if not higher – standards than other publicly traded firms.
Here’s a press release from Cannabiz Mobile back in March 2015
It all looks rather far fetched
CAMBRIDGE, Mass., March 25, 2015 /PRNewswire/ — Cannabiz Mobile, (OTC: LGBI), Cannabiz Mobile Inc. has announced it has secured the Trademark name Canna Bizcard and has executed a license and re-branding agreement with Code2action Inc. for its proprietary mobile business card platform C2A MobiCard. The Company will begin marketing the Canna Bizcard, a mobile business card solution that combines the power of social media sharing with text/sms and email marketing for businesses in various states that have legalized medical and/or recreation marijuana.
Canna Bizcard is a cloud-based mobile business card that enables the user to custom create their business card to include Company logo, photos, contact details, website, audio messaging, social media links and multi-media content like no traditional paper business card ever could.
The platforms sharing and alert system enables users to share their card via text/sms, email, social media sites that include Facebook, Twitter, LinkedIN, Google+ and Pinterest. The system provides the user instant alerts when their card is opened or shared to third party referrals all while building an invaluable database of contact leads.
SEC Information Page
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23545 / May 26, 2016
Securities and Exchange Commission v. Christopher R. Esposito, et al., Civil Action No. 16-CV-10960 (D. Mass. filed May 26, 2016)
SEC Announces Charges in Fraudulent Scheme Involving Stock of Medical Marijuana Industry Company
The Securities and Exchange Commission today announced charges against four individuals and two companies for their roles in conducting a scheme to defraud investors by misappropriating investors funds and by concealing the ownership and control of a publicly-traded company in order to enrich themselves by colluding in the sale of hundreds of millions of shares into the public market, in violation of SEC statutes and regulations.
SEC Case 1:16-cv10960 Document 1 Filed 05/26/16comp23545