SEC shuts down ‘Ponzi-like scheme’ by cannabis company claiming Las Vegas ties
LAS VEGAS, Nev. (FOX5) - The Securities and Exchange Commission obtained an emergency order to halt an alleged ongoing offering fraud and Ponzi-like scheme by a cannabis company that claims it has a growing facility in Las Vegas.
According to a release from the SEC, National Resources Inc., which does business as WeedGenics, and its owners, Rolf Max Hirschmann and Patrick Earl Williams, raised more than $60 million from investors to expand their cannabis operations, but have instead “used the majority of funds to make $16.2 million in Ponzi-like payments and to enrich themselves.”
The company’s website alleges that it owns a 52,000 square foot cultivation facility in Nevada, and a 150,000 sq. ft. cultivation expansion facility in Adelanto, California, but the SEC says that no such facilities exist.
According to a complaint filed in court, since at least June 2019, Hirschmann and Williams have promised investors they would use raised funds to expand WeedGenics facilities, which they guaranteed would produce up to 36 percent returns, but in reality, Hirschmann and Williams never owned or operated any facilities. The complaint alleges that when Hirschmann and Williams received investors’ funds, they transferred the money through multiple accounts to enrich others and for personal use such as entertainment, jewelry, luxury cars, and residential real estate.
The complaint further alleges that in an attempt to avoid detection, Hirschmann, acting as the face of the company, used the fake name “Max Bergmann” the entire time he communicated with investors, while Williams, as Vice President of the company, worked behind the scenes while spending investor funds on his more public career as a rap musician known as “BigRigBaby.”
The court granted the SEC emergency relief against INR, Hirschmann, Williams, and several relief defendants, including a temporary restraining order, an order freezing their assets, and appointment of a temporary receiver over INR and the entity relief defendants. A hearing is scheduled for June 2 to consider whether to issue a preliminary injunction and appoint a permanent receiver.
The SEC’s complaint charges the defendants with violating the antifraud provisions of the securities laws and seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, civil penalties, and officer and director bars. The SEC also seeks disgorgement with prejudgment interest from the named relief defendants.
The SEC’s investigation was conducted by Christopher A. Nowlin and Stephen Bucci and supervised by Finola H. Manvelian of the SEC’s Los Angeles Regional Office. The litigation will be led by Daniel S. Lim and supervised by Gary Y. Leung.
The SEC’s Office of Investor Education and Advocacy encourages investors to review the Investor Alert on Frauds Targeting Main Street Investors, and to access the investor protection resources at Investor.gov.
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