Investors were left holding an empty bag after a Florida man allegedly misused funds invested in marijuana-related companies he controlled.
Steven L. Brickner, 48, of Lithia, Fla., allegedly defrauded more than 60 retail investors out of approximately $5.5 million, the Securities and Exchange Commission said in court documents filed in the U.S. District Court for the Middle District of Florida.
The SEC alleges that, from 2015 to 2019, Brickner falsely represented to investors that he would use their money to purchase a Colorado-licensed marijuana dispensary network and conduct an IPO or merge with an over-the-counter public company, generating significant profits for investors.
He began raising money for the incorporated company known as High Country, the SEC said.
“Brickner told investors High Country would enter into a reverse merger with an over-the-counter publicly traded company and that the new company would contain all the Colorado-licensed marijuana dispensary network assets he claimed to own or agreed to purchase,” the complaint said. “Brickner promoted the investments personally and through word of mouth from other investors.”
In late 2017, Brickner ceased his High Country offering and began soliciting investors to purchase shares of the FirstCanna Group entities, the SEC said. Brickner made the same representations to the FirstCanna Group investors as he did to High Country investors, investigators added.
Brickner moved almost all existing High Country investments into FirstCanna Pharmaceuticals, and then solicited and sold interests in the FirstCanna Group entities to additional investors through 2019, the SEC said. Brickner ultimately raised approximately $5.5 million from more than 60 investors located in several states.
Exclusive Agreements Claimed
According to court documents, Brickner told investors that his company had an agreement in place with a network of Colorado-licensed marijuana dispensaries that operated under the trade name High Country Healing to purchase their assets, and had an exclusive agreement to use the High Country name and trademarked logo nationwide.
In reality, SEC investigators say Brickner was fooling investors while spending their money on a lavish lifestyle.
“Brickner provided multiple investors with sales materials stating High Country had ‘mergers and acquisitions in progress,’ (and) was ‘on track to becoming the largest cannabis operation in the United States by the fourth quarter of 2017,'” the complaint said.
However, according to the SEC’s complaint, Brickner misappropriated approximately $3 million of investor money to fund his lavish lifestyle and for personal expenses, including $1.2 million to purchase classic and luxury cars, and $335,000 in expenses at an adult entertainment club.
The SEC also alleges that Brickner misrepresented to investors his experience as a successful entrepreneur while failing to disclose he had filed for bankruptcy in 2016, and made baseless claims to investors about a purportedly “imminent” merger.
Without admitting or denying the SEC allegations, Brickner agreed to a judgment that permanently enjoins him from violating the charged provisions of the federal securities laws, and orders disgorgement with prejudgment interest and penalties in amounts to be determined by the court. The settlement is subject to court approval.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at firstname.lastname@example.org. Follow him on Twitter @INNJohnH.
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