It’s a new kind of pot 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 stock linked to a hydroponic marijuana firm.

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

The case in Denver federal court comes as Colorado’s pot industry has grown in value to $1 billion since voters legalized marijuana retail sales in 2012. While the sales generated more than $100 million in much-needed tax revenue last year, the freewheeling industry has also triggered unforeseen legal problems.

Bogus Documents

The SEC claims Sears orchestrated the scheme from as early as 2011 with Dittman, his brother-in-law who is also chief executive and sole officer of Commerce City, Colorado-based FusionPharm. Sears allegedly hid his connection to FusionPharm because he controlled three other companies and didn’t want to scare off investors.

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

Sears and Dittman are facing criminal securities fraud and wire fraud charges. Sears’s lawyer, Fredric Winocur of Ridley McGreevy & Winocur PC in Denver, didn’t immediately return a call for comment. Dittman’s lawyer, William Taylor of Sideman and Bancroft LLP in Denver, also didn’t return a call.

The criminal case is U.S. v. Sears, 1:16-cr-00301, U.S. District Court, District of Colorado (Denver).

This article was provided by Bloomberg News.