Russian Billionaire Formerly Close To Putin Secretly Poured Money Into US Cannabis, Leaked Documents Show

December 27, 2022 · Benzinga

Russian billionaire and a former owner of the Chelsea Football Club, which plays in the English Premier League, Roman Abramovich, has been secretly investing in cannabis companies for years.

According to leaked documents, sourced and shared by Forensic News, a Russian oligarch known for his close ties to Russian leader Vladimir Putin has helped fund the two biggest shareholders of multi-state cannabis operator Curaleaf Holdings 

CURLF.

With a market cap of around $3.08 billion, the Wakefield, Massachusetts-headquartered company is considered one of the largest marijuana businesses in the world. Per the report, its shareholders were secretly funded by Abramovich, whose net worth is estimated at around $9 billion.

When Russia invaded Ukraine this year, the Russian tycoon was sanctioned by the U.K. and the EU, but the U.S. Nevertheless, in June, the Department of Justice obtained a warrant to seize two of his planes worth more than $400 million.

An American Success Story’

When the war started, Curaleaf was targeted over its possible connections to Russia. Its executive chairman Boris Jordan took the top spot for his Russian and Ukrainian descent. Jordan, who is a U.S.-born American citizen, was accused of having financial ties to Russian companies and oligarchs.

To this, Jordan responded, “Curaleaf is an American success story founded by Me! Pls stop spreading misinformation. I was born in the US and live and work in the US! Our shareholder Andrei Blokh is also a US citizen. $curlf”

He added, “Being of both Ukrainian and Russian descent, I pray for diplomacy & a peaceful resolution that protects the lives of all citizens on both sides of this conflict.”

Jordan who owns around 18.2% of Curaleaf, was estimated in April to have a net worth of around $1 billion. He spend around two decades in Russia beginning in the early 1990s, where he was considered one of the country’s most prominent foreign investment bankers. What’s more, he once admitted that the had “a close relationship with Putin.”

Russin Tycoon Behind Funding Disguised As ‘Cetus Investments’

Contrary to Jordan’s claims that “Curaleaf is an American success story” funded by him, the leaked documents reveal that Abramovich was silently investing in Jordan and companies under his control through a British Virgin Islands LLC, Cetus Investments.

“Tens of millions of dollars in loans were issued to Jordan and his companies, something that appears to have never been disclosed by Jordan or Curaleaf. Some of the loans included stipulations that the money was only to be spent on purchasing shares in Curaleaf, previously known as PalliaTech Inc,” writes Forensic News. 

For example, back in December 2016, a Delaware-based company owned by Jordan, Lafayette LLC, got a $14 million investment from Abramovich’s Cetus Investment Limited. The promissory note made clear that the fund must be spent to buy 878,569 shares of stock in PalliaTech. Then, in October 2017, the note was amended to include a second loan for $10 million, for the purpose of acquiring extra 418,253 shares of PalliaTech. 

The report notes that in total, Abramovich had lent around $69 million in 2017 and 2019 to Jordan’s companies.

What’s more, Jordan was not the only Curaleaf shareholder to be backed by loans from Abramovich’s offshore company. Its second-biggest shareholder, Andrey Blokh, was also financed by Abramovich in a similar scheme, according to the record. In 2016, Cetus Investment issued a $50 million loan to Blokh for the purpose of buying Pallia Tech shares. Additionally, Blokh gained a line of credit from Cetus for an extra $12 million to invest in other cannabis businesses in the U.S. such as marijuana dispensaries in Los Angeles and Las Vegas.

$140M To Jordan & Blokh, Direct Investment In Curaleaf 

As per Cetus’ internal financial statements, Abramovich’s Cetus had lent around $140 million to Jordan and Blokh by the end of 2018. More importantly, filings and documents from U.S. Securities and Exchange Commission that are open to the public, revealed that Cetus lent $85 million in total directly to Curaleaf. 

Investments in Curaleaf from Ambramovich started even before the cannabis company went public, with the Russian tycoon investing in the company and its principals $225 million. 

Curaleaf confirmed to Forensic News that both Jordan and Blokh were funded by Cetus.

“As with any young company in its early days of securing capital, shareholders Boris Jordan and Andrei Blokh were raising funds through multiple sources and family offices to grow Palliatech, which later became Curaleaf,” the company spokesperson said. “Cetus was a lender to many businesses around the world. All loans referred to in your email were repaid long before Curaleaf was formed or went public. Curaleaf has no debt with Cetus. We cannot speak on behalf of shareholders.”

Karen Greenaway, a former financial crime investigator at the FBI, shared with the outlet her worries about these types of loans. 

“This type of financing, through opaque offshore jurisdictions, is problematic for law enforcement, government regulators, and financial institutions because it hides the ultimate beneficial owner of the investment funds,” Greenaway said. “This financial arrangement often creates insurmountable barriers, particularly for law enforcement, when they attempt to investigate violations of U.S. money laundering laws. Without knowing the identity of the original investor or the source of the funds, it is almost impossible to determine if the invested funds were from legal income.”

Curaleaf Is Not The Only One

The report further revealed that Abramovich also quietly invested in a New York-based cannabis Venture Capital firm, Measure 8 Ventures and that he also owned $1 million worth of shares in Green Gorilla Inc, the first USDA Certified Organic Hemo CBD brand. What’s more, internal financial statements reveal that Cetus also invested more than $1 million in large U.S. cannabis companies like Eaze, and Tilt Holdings 

TLLTF.

Benzinga reached out to Curaleaf for a comment, but the company had not yet responded at the time of the publishing. (Full Story)

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