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Former owner of Canadian-based pot company charged with swindling investors of over a million dollars

Dec 6, 2021 | Media Partners, The GrowthOp

This post is presented by our media partner The Growth Op
View the original article here.

Misappropriated funds used for his and his family’s personal use, as well as to “make Ponzi-type payments to lull earlier investors.”

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Geoffrey Thompson, former owner and operator of an unidentified Canadian-based cannabis company that did business in Colorado, has been charged with swindling investors of more than US$950,000 ($1.2 million).


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The 53-year-old Florida man, formerly of Frankfort, Ill., is set for arraignment later this week after being charged with one count of wire fraud in connection with the scheme, notes a statement from the U.S. Attorney’s Office, Northern District of Illinois. Wire fraud is punishable by as long as 20 years in federal prison.

According to the criminal information filed late last week in the U.S. District Court in Chicago, the man solicited and obtained money from investors in 2018 and 2019. He is said to have falsely represented that the “funds would be used for expanding the company’s business and holding an initial public offering (IPO) of securities,” the statement notes.

  1. It is alleged that Fargesen and Palatnik raised funds from investors with false and misleading representations concerning the company’s management, products, and financials, manipulated the public stock price and pocketed at least US$4 million ($4.9 million) of CanaFarma funds for their own benefit. 

    CanaFarma co-founders charged with securities fraud in scheme to defraud investors

  2. The former mayor “allegedly also drafted zones for commercial marijuana activities to include locations used by his co-schemers, and he ensured they obtained the licences and permits they sought, in exchange for bribes, kickbacks and gifts. /

    Former California mayor accused of pocketing almost $72,000 in cannabis-related bribes faces up to 160 years in prison

  3. Former CannTrust Holdings Inc CEO Peter Aceto, seen in the company's cannabis production facility in Fenwick, Ontario in 2018.

    CannTrust’s former CEO and two former directors charged with fraud


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But that seems not to have been the case; the criminal information reports the company was not in a position for an IPO at the time. As such, it is alleged the accused knowingly misrepresented the company’s financial condition.

Instead, the misappropriated funds were used for his and his family’s personal use, as well as to “make Ponzi-type payments to lull earlier investors.”

The scheme ended with victim investors losing at least US$952,000 ($1.2 million), the statement adds.

“The public is reminded that an information is not evidence of guilt.  The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt,” it emphasizes.

Though not linked to the charge, the U.S. Securities and Exchange Commission (SEC) filed a complaint in the fall of 2020 against a man with the same name “for leading a series of unregistered securities offerings for a cannabis company” that he controlled.


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The complaint maintains that from at least July 2014 through June 2019, he raised more than US$19 million ($24.3 million) from about 500 investors “by selling unregistered securities in violation of the federal securities laws,” and further claims he diverted US$2.7 million ($3.5 million) of investor funds for his own benefit.

The man “is currently working as a consultant for a new cannabis-related venture that is seeking to raise funds from investors,” the 2020 SEC complaint noted.

Earlier this year, J.D. Supra — which publishes and distributes content produced daily by business experts in many industries and fields — noted there seems to be a recent trend in securities enforcement actions focusing on the accuracy and completeness of material disclosures to investors, investor solicitation activities and properly conducting compliant securities offerings.

In October, two men were charged with securities fraud, wire fraud and related offences linked to a scheme to defraud investors in both a Canadian cannabis and a hemp company.

In September, three men in the U.S. were implicated in a cannabis-related scheme in which they allegedly raised about US$2 million ($2.6 million) from retail investors through separate companies, but ended up using the cash for personal matters.

And this past May, an Illinois woman and a Georgia man were charged with fraud and conspiracy after allegedly duping investors of about US$650 million ($787 million) by telling them their money was backing legitimate investments, including cattle and cannabis.


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