SEC Halts Alleged Cannabis Fraud Scheme
The SEC obtained an emergency order to halt an alleged ongoing offering fraud and Ponzi-like scheme by Integrated National Resources Inc. (INR), which does business as WeedGenics, and its owners, Rolf Max Hirschmann and Patrick Earl Williams. The SEC alleges that INR raised more than $60 million from investors to expand their cannabis operations, but instead used the majority of funds to make $16.2 million in Ponzi-like payments and to enrich themselves.
What Did the SEC Allege?
The SEC alleges that Hirschmann and Williams used the following tactics to defraud investors:
They promised investors they would use raised funds to expand WeedGenics facilities, which they guaranteed would yield up to 36 percent returns.
The SEC alleges that Hirschmann and Williams never owned or operated any facilities. When Hirschmann and Williams received investors’ funds, they transferred them through multiple accounts to enrich others and for personal use, such as entertainment, jewelry, luxury cars, and residential real estate.
In an attempt to avoid detection, Hirschmann, acting as the face of the company, used the fake name Max Bergmann the entire time he communicated with investors.
As Vice President of the company, Williams worked behind the scenes while spending investor funds on his more public career as a rap musician known as “BigRigBaby.”
What Did the Court Do?
The court granted the SEC emergency relief against INR, Hirschmann, Williams, and several relief defendants, including a temporary restraining order, an order freezing their assets, and appointment of a temporary receiver over INR and the entity relief defendants. A hearing is scheduled for June 2, 2023 to consider whether to issue a preliminary injunction and appoint a permanent receiver.
What Can Investors Do?
The SEC encourages investors to review the Investor Alert on Frauds Targeting Main Street Investors, and to access the investor protection resources at Investor.gov. If you have investment losses, discuss your investment and potential claims with an experienced securities lawyer.
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