The U.S. Securities and Exchange Commission filed a lawsuit against longtime marijuana investor Douglas Leighton, alleging that he and six associates made millions of dollars by engaging in illegal stock manipulation involving Denver-based cannabis technology firm MassRoots.
The suit alleges that Leighton – founder of Dutchess Capital Management and current principal at Altar Rock Capital – and the other defendants purchased roughly 90% of MassRoots shares in a private offering in 2014. A year later, Leighton steered the company toward a public offering.
The suit, first reported by New Cannabis Ventures, also contends the defendants deliberately omitted their holdings in MassRoots, or their stock sales, in filings to the SEC.
“Between April 2015 and March 2016, the defendants made approximately $3.2 million from their scheme … (and) continued to profit from their sales of MassRoots stock through 2018,” the suit alleges.
The lawsuit seeks:
- A jury trial.
- A permanent injunction against Leighton and the other defendants to prohibit them from securities trading in the future.
- A court order for the defendants to “disgorge all ill-gotten gains” plus interest from MassRoots, along with civil penalties.
MassRoots trades as MSRT on the over-the-counter markets.
Observers speculated in December that MassRoots may have closed its doors, as its website shut down for an extended period of time.
– John Schroyer