A pair of cannabis industry executives defrauded investors of at least $4 million, according to a federal grand jury indictment unsealed Tuesday, which claims the two trotted out a phony CEO who didn’t actually make any business decisions, manipulated the company’s stock price for their own benefit, fraudulently inflated the firm’s financials, and blew a six-figure sum on a luxury vehicle rather than the IPO roadshow for which it was originally intended.
Vitaly Fargesen and Igor Palatnik of CanaFarma Corp., a publicly traded New Jersey-based outfit that describes itself as a “fully integrated, multi-faceted Hemp products brand company,” are now facing multiple counts of securities fraud and wire fraud for their alleged misdeeds. Fargesen, 52, is listed on the company’s website as the firm’s senior vice president of strategic planning. Palatnik, 47, is listed as CanaFarma’s senior vice president of product acquisition. However, Fargesen and Palatnik in fact “exercise[d] secret control” of CanaFarma, the indictment states, accusing the two of hiding their real roles behind a “purported CEO” who was subservient to them.
In a statement released Tuesday, U.S. Attorney Audrey Strauss said, “Vitaly Fargesen and Igor Palatnik presented themselves as entrepreneurs developing a new business for an emerging industry. But, as alleged, Fargesen and Palatnik were just using the trappings of a start-up to run an old-time scam: lying to investors to take money for themselves.”