SEC complaint: 400 investors defrauded of $25M for supposed marijuana farm, CBD extraction facility

SEC complaint: 400 investors defrauded of $25M for supposed marijuana farm, CBD extraction facility

The U.S. Securities and Exchange Commission is accusing six individuals of fraudulently raising $25 million from 400 investors for a part in a supposed marijuana farm and CBD extraction facility.

The money was raised from people across the country between September 2017 and February 2019, according to the complaint filed Tuesday in California federal court.

The accused individuals are all from California or Arizona and their companies were all based in California.

The lawsuit alleges that one group of companies raised about $12.3 million from approximately 226 investors for a marijuana farm in Salinas, California. Another group of companies raised about $13.2 million from approximately 211 investors for an extraction facility to produce CBD, also in Salinas.

The lawsuit says the defendants “misled and deceived” investors about how much profits they could expect, “claiming that the investments would generate annual returns of 100% or more.”

Attorneys for the SEC also say the defendants misappropriated at least $2.7 million of investor money and lied about a purported business loan they were using to finance the extraction facility. Instead, SEC lawyers say, that money went to pay off investors “in an entirely unrelated entity.”

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