SEC Shuts Down $60M ‘Ponzi-Like Scheme’ Tied to Non-Existent Cannabis Farm

The U.S. Securities and Exchange Commission (SEC) said this week it has shut down a multi-year, $60 million cannabis industry “Ponzi-like scheme” by WeedGenics and its owners.

Full story after the jump.

The U.S. Securities and Exchange Commission (SEC) on Tuesday shut down a “Ponzi-like scheme” by WeedGenics and its owners. The agency said WeedGenics owners Rolf Max Hirschmann and Patrick Earl Williams, a rapper known as “BigRigBaby,” raised more than $60 million from the scheme and used the majority of the funds to make $16.2 million in Ponzi-like payments and to enrich themselves.  

According to the complaint, since at least June 2019, Hirschmann and Williams promised investors they would use funds raised to expand WeedGenics facilities, which they guaranteed would produce up to 36% returns; however, Hirschmann and Williams never owned or operated any facilities.  

The complaint alleges that when Hirschmann and Williams received investors’ funds, they transferred the money through multiple accounts to enrich others and for personal use such as entertainment, jewelry, luxury cars, and residential real estate. In an attempt to avoid detection, Hirschmann, acting as the face of the company, used the fake name Max Bergmann when he communicated with investors, while Williams, as vice president of the company, worked behind the scenes while spending investor funds on his more public rap career, the SEC alleges.

Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said that the actions by the duo “demonstrates that, despite the defendants’ extensive efforts to avoid detection, the SEC has the ability to uncover fraud to protect investors.” 

“Rolf Hirschmann and Patrick Williams allegedly had no real company, no product, and no business, yet despite this, they promised investors everything and then delivered nothing.” — Wein Layne in a statement 

The court granted the SEC emergency relief against the company, Hirschmann, Williams, and several relief defendants, including a temporary restraining order, an order freezing their assets, and appointment of a temporary receiver over the company. A hearing is scheduled for June 2 to consider whether to issue a preliminary injunction and appoint a permanent receiver, the SEC said in a press release. 

The SEC’s complaint charges Hirschmann and Williams with violating the antifraud provisions of the securities laws and seeks permanent injunctions, conduct-based injunctions, disgorgement with prejudgment interest, civil penalties, and orders barring them from serving as officers and directors of other firms. The agency is also seeking disgorgement with prejudgment interest from the named relief defendants. 

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