The founder of a successful cannabis beverage company in Denver filed suit against his business’s CEO and two associates, alleging that the executive and his collaborators stole millions from the company over a years-long span.
Daniel Griffin, the founder of Green Cross Colorado LLC, filed a lengthy 12-count lawsuit in Denver District Court against Mark Smith, the CEO of Green Cross, along with Smith’s girlfriend, Sherri Marzario, Marzario’s two daughters, and the company accountant, Richard Ruller. The suit claims the defendants are guilty of breach of contract, fraud, civil theft, and more, Law360 reported.
Smith is also the executive chairman of Leef Brands, a public cannabis company in California that trades on over the counter markets under the ticker symbol LEEEF.
Griffin alleged in the complaint that the three conspired to unlawfully steer millions in profits to themselves and family members, and failed to pay the company’s federal tax bills properly.
Green Cross became well-known in the early days of the Colorado marijuana industry as the makers of CannaPunch, after Griffin founded the business in 2009. He met and hired Smith in 2014 to run the company, and Smith brought on Marzario in 2015 to help with the company accounting in exchange for a 50% ownership stake in the business, Law360 reported. Ruller was hired in 2018.
Griffin believed the company was being run appropriately until he began divorce proceedings with his wife in 2022, which led to an audit of Green Cross’s financial status. At that point, the “problematic bookkeeping” by Smith, Marzario, and Ruller became quickly obvious, according to the lawsuit.
The audit uncovered “an astounding pattern of misappropriation of GCC assets and lopsided distributions of GCC’s profits” to Marzario and her two daughters, the suit alleged.
The misdeeds by Smith, Marzario, and Ruller outlined in the lawsuit include:
- Transferring more than $1 million to a company in which Griffin had no ownership interest.
- Paying nearly $1 million in unauthorized payroll transactions to Smith and Marzario.
- “Hundreds of thousands of dollars” in unauthorized cash withdrawals.
- More than $1.3 million in misappropriated funds from several accounts.
- $5.8 million in “questionable outflows” to businesses that Griffin was not connected to.
- $11.6 million in “questionable expenses” by Ruller.
- Racking up $2 million in IRS penalties for inaccurate and late tax filings.
- Using company funds to renovate homes in California and Minnesota owned by Smith and Marzario.
The three abused their positions at the company to spend lavishly on private jets and other luxuries, the lawsuit asserts. And the tax fraud resulted in more than $200,000 in federal tax liabilities being levied entirely on Griffin, when the liabilities should have targeted Marzario as a 50% owner of Green Cross, the suit claims.
“Marzario and Smith have an established practice of transporting currency in a private jet at Smith’s disposal throughout the U.S. and to some locations in Canada, often with documentation in handwritten notations on the back of literal envelopes in notations that are off the official accounting books of the companies,” the lawsuit alleges.
Griffin is requesting an injunction to prohibit Smith and Marzario from managing Green Cross, an order freezing certain assets, an order to place the two homes in a trust, economic damages, and litigation costs and interest.