The Securities and Exchange Commission (SEC) obtained an emergency order to stop an ongoing investment fraud and Ponzi-like scheme by a cannabis company claiming to have a growing facility in Las Vegas. The company, National Resources Inc., or WeedGenics, and its owners, Rolf Max Hirschmann and Patrick Earl Williams, raised more than $60 million from investors to expand their cannabis operations, but instead, they used most of the funds for themselves and made $16.2 million in fraudulent payments.
The company’s website claims that it owns a 52,000 square foot cultivation facility in Nevada and a 150,000 sq. ft. cultivation expansion facility in Adelanto, California, but the SEC says that no such facilities exist. Since June 2019, the owners promised investors they would use the funds to expand WeedGenics facilities and guaranteed up to 36% returns, but in reality, Hirschmann and Williams never owned or operated any facilities.
The SEC complaint alleges that Hirschmann and Williams transferred investors’ money through multiple accounts to enrich others and used it for personal expenses such as entertainment, jewelry, luxury cars, and real estate. In an attempt to avoid detection, Hirschmann used a fake name, “Max Bergmann,” when he communicated with investors, while Williams spent the investor’s funds on his rap music career under the name “BigRigBaby.”
The court granted the SEC’s emergency relief against INR, Hirschmann, Williams, and several relief defendants, including a temporary restraining order, an order freezing their assets, and the appointment of a temporary receiver over INR and the entity relief defendants. A hearing is scheduled for June 2 to consider issuing a preliminary injunction and appointing a permanent receiver.
The SEC’s complaint charges the defendants with violating the antifraud provisions of the securities laws and seeks permanent injunctions, disgorgement with prejudgment interest, civil penalties, and officer and director bars.
Investors should review the Investor Alert on Frauds Targeting Main Street Investors and use the investor protection resources at Investor.gov.