Debra Borchardt
Unsuspecting investors trusted these cannabis companies which they now accuse of fraud. The desire to be a part of the cannabis industry and promises of quick and hefty returns have caused many investors to lose their money. Those accusations are now making their way into the court system now.
Ohio
This week a couple in Ohio, Paul and Jennifer Allen filed a complaint in the Northern District of Ohio claiming that Sean Williams and the company POHIH cheated them out of a $50,000 investment. Williams was a friend of the Allens and over dinner presented the cannabis investment opportunity for POHIH’s purported farm in Macedonia as well as pictures of actual marijuana crops. The slide show contained spreadsheets of expected sales numbers and approximate quarterly dividend amounts. Williams told the Allens that POHIH had already contracted with a number of marijuana dispensaries in the United States and that once POHIH was cleared to sell marijuana-related products in the United States it would be one of the largest suppliers of cannabis oil in all of the United States. The Allens’ dividend from owning one-half of a share would net them approximately $300,000.00 per quarter.
Williams also said the company was being run by a car dealership owner in Michigan by the name of Kris Swaffer. They were told that Swaffer’s father retired and the car dealerships were sold and Swaffer used his proceeds from the sale to invest in a cannabis operation. In 2015, Swaffer formed Macedonian American K North America, LLC, a Texas limited liability company. On May 18, 2016, Swaffer formed 5 Letters, LLC, also a Texas limited liability company. According to the court documents, Swaffer’s purpose in creating these two companies was to engage in the business of growing, processing, and selling marijuana and marijuana-derived products.
Swaffer also formed POHIH to be in the business of growing, processing, and selling marijuana and marijuana-derived products. POHIH functioned as the U.S. holding company for a foreign entity named 5 Leters DOO Resen. 5 Leters DOO operated a marijuana cultivation operation in the country of North Macedonia. The Allens claim they had been told Swaffer was a business genius, but instead, the dealerships had failed, his home had been foreclosed upon and Swaffer had significant personal debt related to unpaid business loans extended to the automobile dealerships.
Neither Williams nor Swaffer had any cannabis experience. Especially since it isn’t legal to import cannabis products into the U.S.
The complaint alleges that the two raised $5.8 million from 37 different investors across several states. Despite Williams’ and POHIH’s promises and assurances, Allens never received any distributions or return on investments based upon their purchase of the one-half share in POHIH.
In September 2022, the SEC’s complaint alleged that, from at least September 2016 through February 2020, Swaffer and Williams, through POHIH and other now-defunct related entities, raised approximately $14 million from approximately 75 investors in at least 14 states for a start-up marijuana business with operations in Europe, through a series of unregistered securities offerings. “According to the complaint, while some funds raised from investors went to fund operations, Swaffer and Williams misappropriated a substantial amount of the investor funds for personal use while also misrepresenting the risks associated with investment. The complaint further alleges that Swaffer misappropriated at least $2.4 million for his personal use between September 2016 and March 2020. The complaint also alleges that Williams, in addition to being aware of Swaffer’s misappropriation, misappropriated investor funds for personal use between April 2017 and January 2020.”
The Allens want their $50,000 returned plus court costs.
California
In a San Diego County Court, Kate Cathlyne Torres, owner of Kilo Romeo Parliament LLC, alleged that Josh Segura ripped her off for $30,000 in a cannabis company called Suga Leaf. According to the court complaint, Segura told Torres that he needed an investment partner in a cannabis business Segura was starting called Suga Leaf. In December 2022, Segura allegedly told Torres that if she invested $30,000 with Segura, she would get her $30,000 back with 10% interest, and Torres, through her California limited liability company, Kilo, would also receive a 10% equity ownership in Suga Leaf and be entitled to 50% of all net profits derived from sales and delivery of products in San Diego County. Segura also allegedly told Torres that she needed to invest another $345 for equipment for the alleged cannabis business.
The complaint says Segura then went on to tell Torres if she invested another $5,000 with Segura, Torres would receive a 50% interest in 40 acres of real property, on Dehesa Ranch Road, El Cajon, CA, which Segura said he would purchase through a company called Cali Aquaculture LLC. Torres invested a total of $35,345 with Segura. That wasn’t all, Torres and Segura signed an operating agreement in which Torres would be 50% owner of a film production holding company, VI XIX LLC.
By February 2023, Torres began asking Segura for tax forms and updates on the investment. However, Segura has provided no information and won’t return the money. According to the complaint, Segura has only told Torres, he’s out.
Torres is asking the courts for her money to be returned and for damages.
1598000-1598817-torres complaint 1598000-1598527-https-ecf-ohnd-uscourts-gov-doc1-141112609058
