Former DNC Political Operative Sued for Fraud by South Dakota Cannabis Companies

Two South Dakota medical cannabis firms are suing a former political operative for the Democratic National Committee (DNC), accusing the defendant of defrauding the companies and their investors of about $1.7 million.

Full story after the jump.

A former political operative for the Democratic National Committee (DNC) is being sued in South Dakota, accused of defrauding two medical cannabis companies and their investors of about $1.7 million, the Star Tribune reports. Dakota Natural Growers, 605 Cannabis, and more than 20 of their investors filed the lawsuit last month against Will Hailer, eSt Ventures LLC, Badlands Fund GP LLC, and Badlands Ventures LLC claiming that Hailer and the three funds, which Hailer manages, solicited a total of $3.5 million in investments with the “intention of stealing and/or misappropriating most of the money.”

Hailer has served as a senior advisor for the DNC, as a campaign manager for current Minnesota Attorney General Keith Ellison, and as executive director for the Texas Democratic Party.

According to the lawsuit, the cannabis firms had found investors who would invest $3.5 million into the companies but Hailer approached the owners early last year and allegedly promised if they entrusted him with that $3.5 million, he could raise another $10 million to equally invest in Dakota Natural Growers and 605 Cannabis. The capital raise was controlled through eSt Ventures and the investors.

The investors obliged and put the $3.5 million into the Badlands Ventures fund, according to the lawsuit. In court documents, the plaintiffs argue that “the defendants never secured any other investor, for any amount.” Hailer and Badlands GP ultimately returned $1.8 million but the remaining balance was never returned. The parties reached a settlement agreement last year that would have had Badlands Ventures pay about $1 million to Dakota Natural Growers and about $600,000 to 605 Cannabis, and a document filed in court shows the agreement was signed by Hailer but the money was never sent, according to the lawsuit.

The plaintiffs are seeking the return of $1.68 million plus attorney fees and unspecified “punitive damages.”

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