SEC sues cannabis investment fund, warns investors about MJ industry ‘scam artists’

The U.S. Securities and Exchange Commission charged a marijuana-focused investment fund with bilking investors out of more than $3 million and simultaneously warned the public about “scam artists” exploiting “hot” industries such as cannabis.

In a lawsuit, the SEC accuses Texas-based Greenview Investment Partners and its founder, Michael Cone, of using misleading marketing materials and bogus promises of high returns to defraud investors out of $3.3 million.

According to an SEC news release, Cone allegedly:

  • Employed a “boiler room sales staff” that made cold calls to investors and promised them up to 24% annual returns from investments in Greenview.
  • Used an alias to hide prior criminal convictions.
  • Lied about having a former agent from the U.S. Drug Enforcement Administration on staff.
  • Falsely claimed to have a long record of profitably investing millions in cannabis-related businesses.

In reality, the SEC said, Greenview had no track record and its sole investment of $400,000 was in a cannabis company that had yet to harvest a crop.

The SEC complaint also alleges that Cone spent investors’ money on designer clothes and luxury cars as well as on payments to earlier investors to prolong the alleged scheme.

A Greenview spokesperson could not be immediately reached for comment.

In its warning, the SEC urged marijuana investors to be on the lookout for signs of fraud and market manipulation.

Signs of fraud, the SEC said, include:

  • Unlicensed, unregistered sellers.
  • Guaranteed returns.
  • Unsolicited offers.

Signs of market manipulation, the agency noted, include:

  • The SEC having suspended a company’s stock.
  • Abrupt or multiple changes to company name or type of business.
  • News releases that seem implausible, suggesting the company’s stock is being hyped solely to drive up its stock price.
5 comments on “SEC sues cannabis investment fund, warns investors about MJ industry ‘scam artists’
  1. George Bianchini on

    I’ve been warning my jr. associates about this for a while now. Before prop 64 in the grey market we had to deal with the DEA as the boogie man. Now with what was supposed to be a legal market place we have the suit and tie predators to deal with. From regulators making unnecessary rules and onerous regulations to eliminate the former cannabis vendor system to full blown pump and dump stock schemes we now are in the real world of “Free Enterprise” where greed is king.

    Reply
  2. Charlie on

    These types of scams are common across all industries; SEC enforcement stays busy with or without Cannabis. With that said I see garbage offerings all the time in cannabis from folks with shockingly positive professional reputations. Most of the time I’m not sure they even realize the slips. We have an easily solvable problem and the industry should self regulate these scam artists to the trash bin.

    Reply
  3. Gary S. Kaminsky on

    This is garden variety fraud, not so much cannabis related but cannabis provided the “spin” …. Nonetheless, the case prompted the SEC to issue an Alert which should remind investors to diligence thier investee platforms and ensure their partners are professional, ethical and legitimate.

    Reply
  4. Old Timer on

    The ridiculous over regulation gives the bogus fund raisers a perfect environment to ply their trade. Plausible cover stories regarding huge sums of money needed to start up, huge profit potential, and excuses for delays.
    If it was really legal, these scammers would have go somewhere else.

    Reply

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