Former CEO of California Cannabis Brand Charged With Fraud

The former CEO for Shryne Group, the California multi-state cannabis operator behind the popular STIIIZY brand, was charged with multiple fraud felonies in connection with his time at a different company.

Full story after the jump.

The former CEO for Shryne Group, the California-based cannabis holding company and multistate operator behind the popular STIIIZY and Honeyleaf brands, was charged in Alameda County last week with multiple fraud felonies related to a different company.

Brian Mitchell — who recently stepped down as CEO “for personal reasons unrelated to Shryne,” the company said in a press release — was charged with one felony count of conspiracy to commit a crime, six counts of felony insurance fraud, and two counts of workers’ compensation fraud, the Bay Area News Group reports. The charges stem from his time at the helm of Signature Painting and Construction, Inc.

Mitchell co-founded Signature with Eric Oller, who is facing similar charges. Authorities also charged Yama Sekander — who owns a Concord, California-based company called A-1 World Class Painting — with one count of felony workers’ compensation fraud. The men were arraigned last Monday in Alameda County court and all three have pleaded not guilty to the charges.

According to the report, the scheme allegedly used A-1 World Class Painting as a shell company to pay Signature’s workers from 2017-18 and subvert workers’ compensation insurance costs. Prosecutors alleged that the trio misclassified the roles of their employees and the riskiness of the work so as to pay lower insurance premiums.

Authorities estimated that insurance carriers lost about $5 million through the scheme.

“If a business creates an environment where they falsely pay a lower insurance premium, that company has an unfair competitive advantage over one that is law-abiding.” — Alameda County District Attorney Nancy O’Malley, via Bay Area News Group

In a press release last week, Shryne Group announced it had appointed Jon Avidor, formerly Shryne’s President and Interim Chief Financial Officer, as the new CEO. Chief Development Officer Tak Sato was appointed to Avidor’s previous position as the company president.

“As Brian’s personal issues are not related to Shryne Group, there isn’t much more to share on that front,” Shryne Group’s Corporate Communication Director Audie Vergara told Ganjapreneur.

“I can share that we are all excited about the look ahead,” Vergara said. “Jon is an experienced business executive and lawyer with a long history of navigating complicated, dynamic business developments. He is the perfect leader for Shryne Group as we deepen our position in the California marketplace and beyond.”

Shryne Group employs about 2,200 people nationally and also sells products in Arizona, Nevada, and Michigan. The company’s flagship brand STIIIZY was recently named California‘s best-selling cannabis product line and the #1 vape brand in the country, according to the release.

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