The SEC continues its crackdown on fraudulent investment schemes. Texas-based Greenview Investment Partners has been charged with securities fraud. The cannabis investment venture defrauded investors to the tune of $3.3 million.
Another Company Shut Down by the SEC
Over the past few months, the SEC has been aggressive in going after crypto-related companies that intentionally mislead investors. Texas-based Greenview Investment Partners is the latest company to fall under the wrath of the SEC. Company founder Michael E. Cone successfully raised $3.3 million from people looking to invest in the cannabis industry.
Investors are lured in by promises of high returns from their financial contributions. The cannabis industry increases in value virtually every year due to more states declaring it legal. Companies exploring business opportunities in this regard often tend to do well. That is, assuming those service providers have legitimate intentions. In the case of Greenview Investment Partners, there are serious questions regarding its legitimacy.
The SEC claims the company is defrauding investors. Its promised annual returns are not sustainable. A 24% return on investment every single year is nearly impossible to achieve in the marijuana industry. Relying on cold calls to entice investors is also a rather unusual method of raising funds for a legitimate company. Founder Michael E. Cone also used an alias to conceal prior criminal convictions.
Concerns About Cannabis Industry Investing
Cone also lied about having an agent from the Drug Enforcement Agency (DEA) working for the company. In addition, Cone claimed to have earned millions of dollars from investing in cannabis-related businesses, but the SEC found only a single investment of $40,000 to a marijuana company that has yet to grow a crop.
The SEC says that the investment funds raised actually went to pay for Cone’s high-flying lifestyle. Cone used the money to buy luxury cars and designer clothes. He also used funds to make payments to early investors to keep the scam going.
Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office, said:
Greenview allegedly exploited investor interest in the marijuana industry and lied about high returns and the backgrounds of its key executives. Investors must remain vigilant and not let the fear of missing out dupe them into making bad investment decisions.
The SEC issued a warning “that urge investors to consider the risks of investment fraud and market manipulation before investing in a marijuana-related company.” The alert pointed out that a high rate of return that is guaranteed should act as a major red flag.
Investors will need to be aware of such potential fraudulent ventures. Whether it is an initial coin offering or another way of raising money, risks are never far off. Marijuana-related businesses will have a tough time raising money because of the increased SEC scrutiny. Even so, the government agency only does this to protect investors.
Do you think the actions of the SEC will impact other marijuana-based startups? Let us know in the comments below.
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