U.S. investment regulators are accusing two New York hemp operators of scamming investors of $15 million and using at least $4 million for personal use.
In securities and wire fraud charges filed Tuesday by the Securities and Exchange Commission, CanaFarma co-founders Vitaly Fargesen and Igor Palatnik are accused of giving investors baseless revenue projections and pretending to process hemp from their own farm when, in fact, they were making products from hemp supplied by third parties.
Fargesen and Platatnik allegedly promised investors the company would sell hemp chewing gum and other products.
The SEC says the pair bought a shell company in 2019 with the intention of merging it with CanaFarma in order to enable the resulting company to be listed on stock exchanges both internationally and in the U.S. in a reverse merger.
The resulting company traded on the Canadian Securities Exchange, the Frankfurt Stock Exchange and on over-the-counter markets in the U.S. It maintained offices in Vancouver, Canada; Morganville, New Jersey; and New York City.
The hemp operators “pitched investors with falsehoods about a fully integrated hemp company with rosy financial projections,” Richard R. Best, director of the SEC’s New York Regional Office, said in a statement.
The SEC seeks permanent injunctions, disgorgement and prejudgment interest, and civil penalties against Fargesen and Palatnik.