Oregon marijuana entrepreneur Nitin Khanna sued over…

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Traders in failed Portland CBD startup Sentia Wellness sued Oregon entrepreneur Nitin Khanna and a number of other of his associates this month, alleging they perpetrated a $60 million securities fraud by making false claims about their enterprise and disguising the corporate’s monetary scenario.

The lawsuit’s accusations are the newest in a string of scandals which have dogged Khanna for years, together with a rape allegation, manufacturing failures and a infamous actual property scheme.

Plaintiffs in lawsuit, filed Jan. 6 in Multnomah County Circuit Courtroom, embody an funding fund run by Boris Jordan, chairman of Curaleaf, one of many nation’s greatest marijuana firms. Curaleaf acquired one other firm led by Khanna, Portland-based Cura Hashish, in an all-stock deal price about $400 million when it closed in 2020.

This month’s lawsuit pits Khanna and Jordan in opposition to each other.

Within the lawsuit, first reported Tuesday by the Portland Enterprise Journal, Jordan’s funding agency and different Sentia backers accuse Khanna and his associates with scamming them by hiding the Portland firm’s true monetary situation and by falsely claiming that Goldman Sachs was working to boost cash for the enterprise.

“Sentia’s founder and former executive chairman Nitin Khanna committed securities fraud and violated Oregon securities laws by using untrue statements and misleading omissions of material facts to solicit and induce the plaintiff investors to purchase over $74 million in debentures in Sentia,” the lawsuit alleges.

Vivek Kothari, an legal professional representing Khanna, mentioned that Sentia failed due to adjustments within the regulatory surroundings and the pandemic’s influence on retail gross sales. In a press release, he famous different CBD companies stumbled badly after COVID-19 hit.

The plaintiffs within the lawsuit are “sophisticated investors” who knew what they have been moving into, in line with Kothari, who mentioned that most of the traders now suing Khanna backed Cura, too, and “received excellent returns.”

“We look forward to shedding more light on what happened at Sentia and the questionable business practices of these investors, two of whom also sat on Sentia’s board and approved its budget, spending and direction,” Kothari wrote.

Sentia manufactured CBD, or cannabidiol, derived from hemp. Whereas CBD doesn’t comprise the psychoactive ingredient in leisure marijuana, fanatics imagine it has properties that may enhance well being and well- being.

Sentia emerged from Cura amid its sale to Curaleaf in 2019. Curaleaf had its personal line of CBD merchandise and didn’t purchase Cura’s CBD model, so Khanna and different Cura insiders launched a brand new enterprise, Sentia Wellness.

Sentia raised a minimum of $91 million however faltered proper out of the gate, shedding workers and abandoning manufacturing plans. It bought its Social CBD model to a California firm final 12 months.

Allegations on this month’s swimsuit embody:

  • That Khanna claimed Sentia would document $175 million in income in 2019, despite the fact that “Khanna knew there was no reasonable basis to support his projection.”
  • Sentia bought greater than $32 million in “expired and unusable inventory.”
  • Sentia shipped extra merchandise to clients than they ordered, and clients returned greater than 70% of Sentia merchandise shipped within the fourth quarter of 2019.
  • Khanna claimed Goldman Sachs was Sentia’s funding financial institution and would take the Portland firm public by way of a $10 billion preliminary public providing. In reality, the traders allege, “Goldman Sachs had done little, in any, work” to rearrange a inventory itemizing for Sentia. The plaintiffs declare the funding financial institution had solely suggested Sentia on forming its enterprise.
  • That Khanna spent extra time on one other marijuana enterprise and a tequila enterprise than he did on Sentia, neglecting the management position he had promised to tackle at Sentia.

Khanna was as soon as amongst Oregon’s most outstanding expertise traders, however stepped away from the tech business after settling a 2014 lawsuit that alleged Khanna raped his spouse’s hairdresser on the morning of his personal marriage ceremony.

Khanna denied raping the lady. Prosecutors mentioned DNA proof confirmed he had sexual contact with the lady however declined to cost him, saying they couldn’t show the contact was nonconsensual.

Khanna subsequently ran marijuana startup Cura Hashish. Cura emerged from Iris Capital, a Lake Oswego funding agency that value Oregon retirees $1 million after it siphoned their actual property investments into the marijuana enterprise. Iris’ founder pleaded responsible to wire fraud, however Khanna mentioned he joined the corporate after the traders’ cash was diverted and was unaware of the fraud.

In 2018, Khanna stepped down as Cura’s CEO after ladies within the marijuana group highlighted the rape allegations in opposition to him. However he remained energetic within the enterprise and engineered its sale to Curaleaf the next 12 months.

Simply earlier than the sale closed, Cura agreed to pay a $110,000 “dishonest conduct” penalty to Oregon regulators after incorrectly claiming that its a few of its Choose model vapes contained 100% marijuana.

Different defendants named on this month’s lawsuit embody Khanna’s brother, Karan Khanna, who served on Sentia’s board; former Sentia President Angelo Lombardi; former Sentia Vice President Sam Knapp; and attorneys Benjamin Stoller, Allan Goodman and Nicholas Slinde, who offered authorized companies to Sentia.

Slinde, who was Sentia’s exterior common counsel, additionally represented Cura Hashish and Iris Capital. The Oregon State Bar is in its third 12 months of an investigation into Slinde’s position at Iris.

The Bar is investigating allegations that Slinde diverted settlement cash from a enterprise dispute into the marijuana enterprise – by which he held a stake – as an alternative of directing it to Iris. Slinde’s legal professional mentioned he’ll touch upon the swimsuit and the Bar investigation later Tuesday.

— Mike Rogoway | mrogoway@oregonian.com | Twitter: @rogoway | 503-294-7699

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