SEC sues six in alleged $25M scam involving two cannabis enterprises

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(A version of this story first appeared on Hemp Industry Daily.)

Federal securities regulators have accused six people of deceiving investors by promising astounding returns as part of an alleged $25 million scam for a supposed marijuana farm and CBD extraction facility in California.

The money was raised from more than 400 investors from across the country between September 2017 and February 2019, according to a lawsuit filed by the U.S. Securities and Exchange Commission in a California federal court.

Here are the basics of the suit:

  • One group of companies formed by the individuals raised $12.3 million from 226 investors for a marijuana farm in Salinas, California.
  • A second group of companies raised $13.2 million from 211 investors for an extraction facility to produce CBD, also in Salinas.
  • The accused individuals, who are all from California or Arizona, claimed the unregistered securities would generate annual returns of “100% or more,” according to the SEC’s complaint.
  • The defendants allegedly misappropriated at least $2.7 million of the investor money and lied about a supposed loan that would finance the CBD facility.

The money was raised under nine different entities:

  • C Quadrant.
  • Extraction Capital Tier 1.
  • GPA Enterprises.
  • Green Growth Ventures.
  • RJ Holdings Group.
  • Smart Initiatives.
  • Target Equity.
  • Valley View Enterprises.
  • Zabala Farms Group.

The defendants listed in the complaint are Anthony Todd Johnson, Jeremy Johnson, Richard Portillo, Charles Lloyd, Mark Heckele and Michael Gregory.

The SEC is seeking a permanent injunction blocking the six defendants’ investment activity, plus penalties.

Regulators also are seeking repayment of the funds received from the allegedly illegal conduct, plus interest.