CBD Fraud Indictments – Jesse Grillo

CBD Fraud Indictments

CBD Fraud

CanaFarma, listed on both the Canadian and Frankfurt stock exchanges, was a vehicle for securities and wire fraud, according to an indictment recently returned by a federal grand jury in New York.

Vitaly Fargesen and Igor Palatnik, both of New Jersey, are accused of soliciting funds based upon false and misleading representations of their company. The two also are charged with failing to invest solicited funds as promised and manipulating the public stock price of the company.

According to the CBD fraud indictment, the men raised more than $14 million, including investments in private shares, and used at least $4 million of that company money for their own personal benefit and to further the alleged scheme.

CanaFarma initially sold a CBD chewing gum and later added CBD tinctures and skin creams. While the company marketed itself as a “fully integrated cannabis company” in reality, all of the products came from third-party vendors, the indictment alleges.

Through a grower, the company harvested 128,000 pounds of hemp in 2019, but didn’t process or sell any of it, or use it in any product, prosecutors alleged. The company never built a processing plant, despite claims to investors that the business plan included having a “Fully Certified Clean Processing Facility.”

Just last month, CanaFarma announced that it intended to make an acquisition in the dietary supplement and functional foods space, agreeing to purchase Avitas Bio Corp.

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