Weedweek report…. An investor who bet $5M on prominent California brand Bloom Farms, is suing its parent company. He alleges it engaged in a “pattern of fraudulent misrepresentation and concealments.”
According to the Delaware lawsuit, American General Resources (AGR) said it would achieve positive, growing net income starting in November 2019.
Within 30 days of the June 2019 investment, plaintiff Jeff Menashe claims the company revised down previous net income and pushed back its positive net income target to May 2020. Menashe is CEO of financial firm Demeter Group.
At the time of investment, Menashe says he wasn’t aware a “federal securities fraud case was brewing” against then-AGR CFO Ronald Roach. Roach subsequently pleaded guilty to two counts of fraud in a “solar energy Ponzi scheme,” unrelated to Bloom, which cost investors and the U.S. Government $1B.
- Plaintiffs “became concerned about the extent to which foul play or fraud might explain the reasons for AGR’s claiming insolvency a mere 34 days after closing the financing” in Q4 2019.
- AGR, according to the lawsuit, has “steadfastly refused to have an independent third-party audit,” and is pursuing a Series E financing.
- The suit alleges that the company “continues to fail woefully in observing basic principles of corporate governance.”
- A spokesman for Bloom Farms declined to comment on the plaintiffs “unfounded” claims, and said the company will “vigorously” defend itself.