The Securities and Exchange Commission (SEC) has leveled fraud charges against erstwhile hemp firm CannaFarma Hemp Products Corp, (CSE:CNFA) and its founders. According to the SEC, the company allegedly committed fraud in a securities offering that raised $15 million from investors. The SEC claims that a portion of the funds was used for personal and unrelated expenses.
CannaFarma has offices in New York and Vancouver. Shares are traded on the Canadian Securities Exchange.
According to the complaint, while raising funds the defendants made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties. The complaint also alleges that financial information provided to investors misstated historical revenue numbers and included baseless projections about future revenues.
The complaint also alleges that founders Vitaly Fargesen and Igor Palatnik misappropriated at least $4 million and used the funds for their personal use and purposes unrelated to CanaFarma.
“As alleged in our complaint, the defendants pitched investors with falsehoods about a fully integrated hemp company with rosy financial projections” said Richard R. Best, Director of the SEC’s New York Regional Office. “We will relentlessly pursue those who deceive investors and misappropriate and misuse their funds.”