Reg A+: GPL Ventures, HempAmericana Ploy Earns Fraud Charges by Securities and Exchange Commission

The Securities and Exchange Commission (SEC) has charged HempAmericana its CEO, and six others with allegations of a penny stock fraud scheme. The SEC also charged certain of the participants with operating as unregistered dealers, and has obtained emergency relief to halt ongoing conduct.

HempAmericana is a CBD company selling hemp-based products. Shares were traded on OTC Markets.

According to InvestingNews, HempAmericana originally raised capital on minivest, a site that is no longer live.

According to the SEC’s complaint, since July 2017 GPL Ventures purchased more than 1.5 billion shares of HempAmericana, Inc. stock through a Reg A+ offering, with the understanding that HempAmericana would use a portion of the offering proceeds to “secretly finance stock promotions that would enable GPL Ventures to sell its HempAmericana shares at a profit.”

The SEC claims that GPL Defendants have been acting as unregistered dealers by privately acquiring large blocks of stock in approximately 140 microcap issuers and publicly selling those blocks into the market for their own account, generating gross proceeds of at least $81 million. HempAmericana is said to be one of the most profitable schemes.

The SEC’s complaint alleges that HempAmericana misled investors regarding its use of the offering proceeds and that co-defendants Seaside Advisors and Lawrence Adams paid a stock promoter who, in turn, funded promotions of HempAmericana’s stock that failed to disclose HempAmericana’s role in financing the promotions and that GPL Ventures intended to unload its shares into the promotion.

GPL Ventures and certain of the defendants allegedly generated about $11 million in illegal profits from the plot.

The SEC’s complaint charges the defendants with violating the antifraud provisions of the federal securities laws, and seeks disgorgement of ill-gotten gains with prejudgment interest, civil penalties, permanent injunctive relief, and penny stock and officer and director bars against various defendants. The complaint also charges multiple defendents and the GPL entities with operating as unregistered dealers, and given their ongoing conduct, the SEC sought and obtained an order temporarily restraining these defendants and freezing their assets until further order of the Court. The SEC’s investigation is ongoing.

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