Two New Jersey men last week pleaded guilty to two counts of fraud related to swindling investors in CanaFarma Corp. and CanaFarma Hemp Products Corp. Vitaly Fargesen, who served as CanaFarma senior vice president of strategic planning, and Igor Palatnik, the company’s senior vice president of product acquisition each pleaded guilty to one count of conspiring to commit securities fraud and one count of conspiring to commit wire fraud in association with the scheme.
The duo were initially charged last year for misappropriating at least $4 million in investor funds, in what U.S. Attorney Damian Williams described as “a sophisticated scheme to obtain millions of dollars from investors with the promise that their money would be spent on building a legitimate company.”
“Instead, they lied about their business, lied to their auditors, and stole millions of dollars of investor funds. Today’s guilty pleas reflect my Office’s commitment to prosecuting those who greedily lie to investors to line their own pockets.” — Williams in a press release
According to prosecutors, Fargesen and Palatnik used their control to raise about $14 million in funds, including investments in private shares of CanaFarma, with false and misleading representations concerning the company’s management, products, and financials and failed to invest investors’ funds as promised and used those funds for personal use. Fargesen and Palatnik effectuated the scheme by controlling CanaFarma through a nominal CEO who reported to the duo and lied to investors regarding CanaFarma’s actual and anticipated operations and attempted to artificially inflate CanaFarma’s reported revenue by making false statements to CanaFarma’s auditors, and misappropriating millions of dollars of investor funds.
The combined charges carry a maximum sentence of 10 years in prison. Both men are expected to be sentenced in January.
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