Doyen Elements Geoff Thompson to Plead Guilty

Doyen Elements became Covalent Collective and later was acquired by Cultive.

The cannabis fraud drama of Doyen Elements, or Covalent Collective, might finally be coming to an end. Geoff Thompson is scheduled to enter a plea of guilty at a hearing on Dec. 13, 2022, before Judge John Kness at the U.S. Courthouse in Chicago, according to the U.S. Department of Justice. Sentencing is expected to happen at a later court appearance.

Green Market Report has covered the Doyen/Covalent story for several years as it slowly worked its way through the system. In December 2021, Thompson was charged in federal court in Chicago for ripping off investors to the tune of $950,000. Thompson was charged with one count of wire fraud which is punishable by up to 20 years in federal prison.

Accelera

In 2020, Thompson agreed to a settlement with the Securities and Exchange Commission (SEC) for an amount of over half a million. The settlement was related to stock fraud associated with Accelera Innovations and Synergistic Holdings. Thompson had agreed to a payment of $350,000, representing profits gained as a result of the conduct alleged in the Complaint, along with prejudgment interest in the amount of $ 74,849.97, for a total of $424,849.97. In addition to that, Thompson had agreed to pay a civil penalty in the amount of $100,000 in the form of four payments of $25,000 each. He is also barred from serving as an officer of a public company for five years and from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock.

Thompson continually told investors that an IPO of the company he was raising money for was imminent when it was not. He raised $952,000 and used most of the money for personal expenses. The complaint also stated that Thompson told investors that the company had secured access to bank financing, when it had not, and represented to investors that the company had revenues resulting from an acquisition of another company when it did not. It was a classic ponzi scheme in that Thompson is accused of using newer investor money to pay out to older investor money to assure them that their investments were secure.

Doyen Elements

At the same time that the SEC filed the complaint about Thompson and Accelera and barring him from working with securities, Thompson and his cannabis company Doyen Elements were selling shares online. Unsuspecting investors gave Thompson money not knowing the SEC was after him for the Accelera scheme.

Shareholders started to question their Doyen investments. They invested money into Doyen Elements and when their money disappeared, they were told there were two Doyens. At the time, Thompson said the confusion stemmed from the fact that there was Doyen International (Canada) and Doyen Elements (U.S.). Thompson said the Doyen Elements company is the group that is ignoring shareholders and has renamed itself Reach Genetics. He said that this is the company these shareholders really invested in, not Doyen International. He said that Doyen International sued Doyen Elements accusing the group of hijacking the Reg. A fundraising and requesting that they stop using the Doyen name.

Covalent Collective

In March 2019, Doyen International announced it was rebranding and renaming itself to Covalent Collective. In addition, the company announced Bill Gregorak would be the Chief Executive Officer. Prior to being named CEO, Mr. Gregorak served as Chief Financial Officer of Covalent Collective since February 2018. Covalent Collective raised millions of dollars from cannabis investors and planned to buy a property called the Colorado 16 (CO16). Now the company is asking those investors for more money to fight a lawsuit over the acquisition and is accusing its former director Geoff Thompson of being a co-conspirator with the CO16 sellers. Covalent spent roughly $9 million on the failed Colorado 16 acquisition.

Black Bear Farms

The situation of this company gets even messier and more tangled with the current owners of Covalent. Various emails to the shareholders, which Green Market Report has reviewed explain how Covalent shareholders would receive a part of a cannabis farm called Black Bear Farms so that their investments won’t be zeroed out. Black Bear also operates as a company called Cultive. Covalent’s President Sal Milazzo is also President of Cultive. Gregorak recently told Covalent shareholders in an email, “Covalent shareholders collectively own the majority of both Black Bear Farms and AmaVie.” Yet, in a later email, Gregorak stated that Covalent shareholders only owned a 5% interest in Cultive (or Black Bear Farms).

More confusing is a letter from Milazzo as President of Cultive saying that the company was acquiring Covalent. Gregorak stated in another email that Cultive had a valuation of $49 million. This valuation is hard to verify as one shareholder complained he had never seen a financial statement.

Cultive

In November 2022, Milazzo sent a letter to Cultive investors stating that the outdoor crop had been harvested and was going to be processed. He also relayed a story that the product had almost been destroyed for violations, but that they were able to convince the Department of Cannabis Control (DCC) that they hadn’t committed the violations. However, within the letter, it states, “While on the call, one of their principals of this company was an individual that approached me about starting a cannabis company in Illinois.  Today, we are providing flower and packaging services at Altum to fill a couple of their orders.” (Altum is Cultive’s distribution arm)  If this is true, then Cultive is sending product across state lines. 

In Closing

While Thompson hasn’t been a part of the Doyen/Covalent story for some time, the saga continues. The investors have seen their shares get passed along from company to company and while they receive updates, there is little hard information in these letters. The November letter didn’t state how much cannabis had been harvested, just that there was a 200,000 square foot canopy and that the product had tested for a high level of THC. It also noted that operational costs had been cut by 40%. Otherwise, the letter provides no hard numbers for these investors.

Debra Borchardt

Debra Borchardt is the Co-Founder, and Executive Editor of GMR. She has covered the cannabis industry for several years at Forbes, Seeking Alpha and TheStreet. Prior to becoming a financial journalist, Debra was a Vice President at Bear Stearns where she held a Series 7 and Registered Investment Advisor license. Debra has a Master's degree in Business Journalism from New York University.


2 comments

  • James

    December 14, 2022 at 4:25 pm

    I would like to follow up and find out what sentence the court ultimately imposes. Will that be posted here, or is there another web site we can check to get that information?

    Reply

    • Jenel Stelton-Holtmeier

      December 14, 2022 at 5:00 pm

      We’ll definitely be watching for updates as they come out!

      Reply

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