The U.S. Securities and Change Fee (SEC) on Thursday charged hashish cultivation and distribution firm American Patriot Manufacturers (APB), its chief govt officer Robert Y. Lee, and 5 different entities and people with fraud. The company additionally charged present and former executives Brian L. Pallas and J. Bernard Rice and APB subsidiaries DJ&S Property #1 LLC, TSL Distribution LLC, and City Pharms LLC.
The SEC alleges within the complaint that the defendants raised greater than $30 million from greater than 100 traders and enriched themselves by funneling the cash into their private accounts and spending tens of hundreds of {dollars} on executives’ private bills.
The SEC claims Lee, Pallas, and Rice, since at the least mid-2016, made false and deceptive statements to traders about varied facets of APB, together with its monetary situation, the scope of its operations, the worth of its Oregon hashish farm, and the security and safety of investing within the firm.
In a statement, Carolyn M. Welshhans, affiliate director of the SEC’s Enforcement Division, mentioned “American Patriot Manufacturers Inc. and a few of its senior executives fabricated enterprise earnings and prospects to entice traders with falsehoods that ultimately left traders with basically nugatory securities.”
The grievance prices APB, Lee, Pallas, Rice, DJ&S Property #1 LLC, TSL Distribution LLC, and City Pharms LLC with violating the antifraud provisions of the federal securities legal guidelines. The lawsuit seeks everlasting injunctive reduction, disgorgement with prejudgment curiosity, civil penalties, and officer and director bars towards Lee, Pallas, and Rice.
The grievance names as reduction defendants, and seeks disgorgement with prejudgment curiosity from, three affiliated entities – Legion Accounting Providers, Inc., Puerto Rico One Corp., and Castro Enterprise Enterprises LLC – that allegedly obtained tens of millions in investor proceeds.
The grievance was filed in the US District Courtroom for the District of Puerto Rico.
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