An investment fund based in Addison, Texas, and its founder have been charged by the Securities and Exchange Commission with promising “massive” returns on marijuana investments that ended going up in smoke.
Greenview Investment Partners and its founder, Michael E. Cone of McKinney, Texas, are charged with fraud after raising more than $3.3 million from 60 investors in 26 states in a matter of a few months starting in late 2017. The U.S. Attorney for the Central District of California also filed criminal charges for fraud against Cone. He used California and New York addresses that were just mailbox addresses rather than offices, the complaint said.
Cone not only used false marketing for the fund but also hid the fact that he had a past criminal record. He used much of the money to for himself, including buying luxury cars and designer clothes, and to make payments to early investors, the complaint said.
The SEC issued an investor alert Wednesday warning people to beware of those soliciting money for “hot” industries such marijuana. Investor should be make sure fund managers are registered with the SEC or state regulators and they should be wary of anyone promising guaranteed returns or making unsolicited offers.
Cone was not a registered fund manager and used an alias of Brian Gwinn for many of the transactions. He took biographies off the Internet to invent executives for his fund, the SEC said, all-the-while promising investors annual returns of up to 24 percent.
“Greenview allegedly exploited investor interest in the marijuana industry and lied about high returns and the backgrounds of its key executives,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “Investors must remain vigilant and not let the fear of missing out dupe them into making bad investment decisions.”