The Securities and Exchange Commission (SEC) has leveled charges against Guy S. Griffithe and Robert W. Russell, and their affiliated companies for an alleged scheme that defrauded investors who thought they were purchasing interests in a Washington-licensed recreational cannabis company. According to the SEC, investors were duped out of approximately $4.85 million. The SEC claims that defendants offered and sold securities in SMRB, LLC to at least twenty-five investors residing in several states, including California, Washington, Arizona, and Texas.
The SEC’s complaint alleges that Griffithe, of Laguna, California, used Renewable Technologies Solution, Inc., an entity he controlled, to sell investors purported ownership interests in SMRB LLC, a Washington company owned by Russell. The company apparently held a license to grow marijuana under the state’s recreational cannabis laws.
According to the SEC, Griffithe and Russell led investors to believe their investments in Renewable Technologies Solution would be used to operate SMRB.
Instead, according to the SEC, Griffithe allegedly spent approximately $1.8 million of investor funds on personal and unrelated business expenses, including payments toward several luxury cars for himself and a yacht for Russell.
The SEC itemizes some of the expenditures as follows:
- 2008 Bentley Continental,
- 2012 Mercedes Benz C Class,
- 2013 Ford Mustang,
- 2015 Porsche Panamera,
- $250,000 towards a 65-foot Pacific Mariner yacht bought by Russell and Sonja Russell,
- $25,000 towards a 42-foot Hydrasport custom powerboat,
There is more.
Griffithe also allegedly deposited approximately $1.7 million into Russell’s personal bank accounts.
To create the illusion that the marijuana business was profitable and paying dividends as promised, Griffithe allegedly paid out purported profit distributions to some investors, which were partially funded in a Ponzi-like fashion using funds from other investors.
The SEC’s complaint, filed in federal court in California, charges Griffithe, Russell, Renewable, SMRB, and Green Acres Pharms LLC with violating the antifraud provisions of the federal securities laws.
Additionally, the complaint charges Griffithe, Renewable, and Green Acres Pharms with violating the registration provisions of the federal securities laws.
The complaint, which also names Russell’s wife, Sonja Russell, as a relief defendant, seeks permanent injunctions, return of allegedly ill-gotten gains with prejudgment interest, and civil penalties.
SEC v. Guy Griffithe and Robert Russell comp-pr2020-14