SEC Charges Oregon Cultivator and Others with Financial Crimes

March 22, 2023 · MG Magazine

Washington, DC, USA - June 25, 2022: The logo of the U.S. Securities and Exchange Commission (SEC) is seen at its headquarters in Washington, DC.

The Securities and Exchange Commission (SEC) has charged American Patriot Brands Inc. (APB), its chief executive officer, and five other entities with siphoning off millions of dollars in a long-running scheme that defrauded more than 100 investors across the country.

According to the SEC’s complaint, APB CEO Robert Y. Lee, along with current and former executives Brian L. Pallas and J. Bernard Rice, began making a series of “false and misleading statements to investors” in 2016 about the company’s financial position and operational scope, the value of its Oregon farm, and the security of investing in APB. The company raised more than $30 million from investors, then funneled millions of dollars into APB executives’ personal accounts and used tens of thousands for personal expenses, according to the complaint.

“As the SEC complaint alleges, American Patriot Brands Inc. and some of its senior executives fabricated business profits and prospects to entice investors with falsehoods that in the end left investors with essentially worthless securities,” said Carolyn M. Welshhans, associate director of the SEC’s Enforcement Division. “This action reflects the SEC’s ongoing commitment to holding accountable those who seek to profit through lies and deception.”

American Patriot Brands Inc., formerly The Grilled Cheese Truck Inc., is a Nevada corporation and vertically integrated cannabis company with headquarters in Newport Beach, California. The company primarily focuses on cultivating and distributing medicinal and recreational cannabis.

Federal prosecutors argue that APB promoted itself as one of the largest cannabis farms in the country, supported by inflated financial information and revenue projections, despite producing only a small amount of sellable cannabis a year. APB promised investments would be secured by a lien on APB’s Oregon farm, during a time in which the farm did not have enough equity to secure investments. APB urged investors to “act quickly” before the company made its securities widely available, an event APB claimed was imminent. APB also told investors it had multistate and worldwide operations, despite having no operations outside Oregon.

Defendants in the case include APB, the three named executives, and the company’s Oregon-based subsidiaries DJ&S Property #1 LLC, TSL Distribution LLC, and Urban Pharms LLC, all of whom are charged with violating antifraud provisions of federal securities laws. Puerto Rico One Corporation, Castro Business Enterprises LLC, and Legion Accounting Services Inc. are listed as relief defendants that received ill-gotten gains as a result of the illegal acts of the other named defendants. The SEC seeks permanent injunctive relief, disgorgement of allegedly illicit gains with prejudgment interest, civil penalties, and officer and director bars against Lee, Pallas, and Rice. The agency also seeks disgorgement from the relief defendants. (Full Story)

In categories:Finance Legal
Next Post

Brazil to rule whether businesses can plant cannabis, potentially opening passage to legal cultivation

A Brazilian appeals court has agreed to rule on whether companies and farmers can plant cannabis in the country, which could open the door to legal cultivation for medicinal and industrial purposes after legislative efforts stalled in recent years. The decision by…
Previous Post

The growing Chinese investment in illegal American weed

A few days before Christmas, a joint law enforcement task force found nearly 9,000 pounds of cannabis worth almost $15 million during a raid in a suburban neighborhood in Antioch, Calif. The California Department of Cannabis Control believes that the four houses…
Random Post

Canada cracking down on words ‘soda’ and ‘cola’ on cannabis labels

Health Canada is asking federally licensed cannabis producers to stop using certain words on labels and in promotions for infused beverages, warning they could appeal to young people. The words – “soda,” “cola,” “root beer” or “ginger ale” – do not comply…
Random Post

San Diego Lowers Taxes For Marijuana Operators To Help Them Compete And Benefit Community

San Diego’s Board of Supervisors voted to lower tax rates for cannabis shops in the county to allow businesses to compete with those in neighboring cities, reported San Diego Union-Tribune. Following a 4-1 board vote, the tax measure would be imposed on five…
Random Post

Pennsylvania Governor’s Office Says Ohio Marijuana Legalization Is ‘Another Reminder’ Of Need To Enact Reform As Lawmakers Tout ‘Momentum’

With Ohio becoming the latest state to legalize marijuana, there’s a renewed sense of urgency to follow suit in neighboring Pennsylvania, with the governor’s office calling it “another reminder” of the need to enact reform. Pennsylvania is now more solidly blanketed…
Random Post

The Importance of Branding for Your Customers in 2023

The cannabis industry has come a long way since Colorado voters decided to legalize recreational use in 2008. In the early days, the novelty of legal weed was enough to push brands forward to consumers, but anyone who has ever visited trade…