Greenview Investment Partners, a Texas-based private equity firm, and its founder were charged with fraud by the Securities and Exchange Commission for misleading investors with promises of large returns on cannabis-related businesses.
The firm and founder Michael Cone raised more than $3.3 million using boiler room tactics such as cold calling and offered annual investment returns of as much as 24 percent, the SEC claimed.
The SEC’s complaint also alleged that “Cone used an alias to conceal his prior criminal convictions, lied about having a former agent from the Drug Enforcement Administration on staff, and falsely claimed to have a long record of profitably investing millions in cannabis-related businesses.” The agency found that Greenview had no investment track record and that its sole investment was $400,000 in a cannabis company that has yet to harvest a crop.
Following Greenview and a spate of similar recent cases (including one complaint against a company called Bud Genius), the SEC issued an alert to investors about fraudsters promoting investment in cannabis-related companies.
It pointed out that “a guaranteed high rate of return on your investment is a red flag of fraud.”
States such as California have relaxed their laws on cannabis use in the past few years, which has led to an expansion in business opportunities and an uptick in private funds devoted to the space.
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