SEC Charges Marijuana-Container Company With Illegal Stock Sales

Its a brand-new various kinds of jackpot bust.

The Justice Department and the U.S. Securities and Exchange Commission filed criminal and civil charges against two Colorado men who allegedly reaped more than $12 million from selling bogus inventory linked to a hydroponic marijuana firm.

The men, William Sears and Scott Dittman, used false fiscal filings and bogus letters from a solicitor to prop up FusionPharm Inc ., inflating sale of refurbished shipping containers called PharmPods that are designed for growing jackpot indoors, the SEC said in a statement on Friday.

The case in Denver federal tribunal reaches as Colorados pot industry has grown in value to $ 1 billion since voters legalized marijuanas retail sales in 2012. While the sales made more than $100 million in much-needed tax revenue last year, the freewheeling industry has also triggered unforeseen legal problems.

Bogus Documents

The SEC assertions Sears orchestrated the strategy from as early as 2011 with Dittman, his brother-in-law who is also chief executive and sole police officers of Commerce City, Colorado-based FusionPharm. Sears allegedly obscured his connection to FusionPharm because he controlled three other companies and didnt want to scare away investors.

He and Dittman issued stock in the three firms with the aid of bogus corporate records, reaping $12.2 million in profit, relevant agencies supposed. Sears allegedly used some their windfall to prop up the jackpot business, reporting the cash as revenue in press releases and financial reports to mislead investors about sales of the marijuana-growing containers. The plot led through at least 2014, the SEC said.

Sears and Dittman are facing criminal securities fraud and wire scam accuses. Searss lawyer, Fredric Winocur of Ridley McGreevy& Winocur PC in Denver, didnt instantly return a call for comment. Dittmans solicitor, William Taylor of Sideman and Bancroft LLP in Denver, also didnt return a call.

The criminal case is U.S. v. Sears, 1:16 -cr-0 0301, U.S. District Court, District of Colorado( Denver ).

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