Two men associated with Colorado marijuana company FusionPharm, Inc. were charged by the SEC with conspiracy to defraud on Friday.
The SEC alleged that company CEO and founder Scott Dittman and William Sears engaged in a complicated scheme to place preferred shares of the company stocks in the name of another company (Microcap) to disguise its true ownership by an “Affiliate” of the company, in order to induce brokers into believing the stock was unrestricted, and could be sold after it was converted to common stock and placed in brokerage accounts under the false name. The SEC further alleged that the remainder of preferred shares in the Microcap name would then be transferred to other people or entities related to Sears, who would have the stock converted to common stock and sold to raise additional monies.
The SEC charged that the illegal sales of restricted stock were then used to fund company operations. Dittman and Sears both face one count of Conspiracy to Defraud the US in the action. The link to the SEC press release is below:
Jeff Petersen is an attorney with offices in San Diego and Chicago representing clients in all manner of SEC enforcement proceedings. He can be reached in San Diego at 858.792.3666, and in Chicago at 312.583.7488.