Investor Sues MjLink for Bogus Numbers

The groups claimed millions of users; the data showed thousands.

Investor Alan Lamothe filed a legal complaint against Decentral Life Inc. (OTC: WDLF), which is also known as Social Life Network Inc.; MjLink.com; Huntpost.com Inc.; LikeRE.com Inc.; Ken Tapp; and Gregory Todd Markey alleging the group made bogus claims about user numbers on the websites.

Lamothe says he invested more than a million dollars believing the claims that the websites had millions of users, which would have led to significant income from ad revenues and subscriptions. The group also told Lamothe that there was a potential for an initial public offering or special purpose acquisition corporation that would also lead to a profitable return for the investors.

Decentral Life

At the heart of the case is a Colorado-based company called Decentral Life, which provides social networking and e-commerce platforms. MjLink was presented as a subsidiary of Decentral Life and was designed to operate as a cannabis technology and media sales organization with two A.I. powered social networks: WeedLife.com and MjLink.com. Ken Tapp is WeedLife’s chairman and co-founder and MjLink’s chief executive officer and co-founder.

Tapp is also the chairman of the board of Outdoorsmen.com Inc. and co-founder of HuntPost, both of which are online communities for outdoor sports fans. Tapp is the Co-Chief Executive Officer, Director and co-founder of LikeRE which is a real estate social networking platform. Markey is the President and Board Director of Decentral and the President of MjLink.

Lamothe alleges that Tapp and Markey claimed that Decentral and MjLink had millions of users and were involved in promising M&A transactions that convinced him to invest. He says if he knew the true financial picture of the company he would not have invested.

Fake MAUs

Monthly active users (MAU) are a common metric to describe a website’s success. Lamothe says in his complaint that the group made up the numbers.

The court document read:

Markey and Tapp misrepresented that MjLink had 4,337,379 MAUs on December 31, 2019, and 5,681,966 MAUs as of December 31, 2020. By April 15, 2022, without any support, Markey and Tapp published that MjLink’s MAU count was 8.8 million as of March 31, 2022. 39. On February 15, 2021, Tapp said in relation to MjLink, “[w]e now have more than 5 million users accessing our networks each month spanning more than 120 countries worldwide. Over the past eight years our network has processed over one billion posts and served up 20 billion page views.”

Tapp also claimed that Weedlife Inc. had millions of users, whereas Lamothe said the site had only 7,186 MAUs, with many user profiles fraudulently duplicated. Lamothe also claims that when Tapp filed an S-1 with the SEC for MjLink, he used similar fake numbers. He claims that when the SEC requested supporting material for the MAU claims, the group withdrew that part of the filing instead of providing supporting documents.

A check of website analytics firm Semrush shows MjLink to only have current traffic of approximately 1,400.

Mj Link Spinoff Claims

The complaint also outlines the plan to spinoff MjLink into a public company. In February 2020, a Form 1-A was filed with the SEC to raise $50 million. The offering claimed that if the company raised $4.3 million it would list on the NASDAQ, but according to the complaint the SEC instead said it would need to raise $17.2 million. By March 2020, the offering was pulled and the group said it was premature to pursue the spinout.

However, Lamothe says the pair kept promoting MjLink. The claim alleges, “Tapp and Markey went so far as to baselessly state that MjLink had an additional 500 investors join MjLink’s offering, bringing “total investment pledged by non-accredited investors to just over one million dollars” and “over five million dollars pledged by accredited investors and that includes private equity groups and institutional investors.” No such investors existed.”

He also alleges that from February through April 2021, MjLink promised shareholders that the price per share would be increased from $2.50 to $5.00 per share and that to do so would have required a Reg-A Tier 2 IPO offering. The offering was never filed.

The complaint also states that the two continued to take part in podcasts as last as 2022 touting the company’s potential M&A deals and that it also may have a potential acquirer. By May 2023, it seems the potential purchase was withdrawn, but Lamothe claims there never was a deal – that it was just a ploy to attract investors.

Uplisting Claims

The investor also says he was duped into believing that Tapp and Markey had plans to uplist Decentral from the OTC to the NASDAQ marketplace which the two announced in September 2021. The OTC stock was trading for fractions of a penny, but according to the court document, Tapp told Lamothe that the shares would get up to a nickel and at that time, the stock could get uplisted and they would be able to sell the shares at a great profit.

In addition, Tapp is accused of saying he had an external analyst valuing Decentral at $500 million which would drive the penny stock price higher. Lamothe claims no such analyst valuation ever existed.

The complaint also alleges that Tapp wanted to pursue acquisitions for the company, which happened to be other Tapp businesses that participated in a Decentral incubator.

Decentral Today

In all, Lamothe says he invested $1,748,766.56 in Decentral and $5,000.00 in MjLink through his purchase of the collective millions of shares of common stock.

Decentral continues to trade today at fractions of a penny. In September 2023 Decentral Life announced a Binding Letter of Intent with MjLink.com, Inc., which outlined the purchase of the business, materials, and services of MjLink.

In October 2023, a Joint Venture agreement between MjLink and Indoor Harvest Corp was announced that would transfer to Decentral Life following the completion of the acquisition. Indoor Harvest Corporation and MjLink.com, Inc. say they are partnering to create a technology and media platform tailored for the Hemp and CBD industry as well as other emerging growth companies.

Leslie Bocskor, CEO of Indoor Harvest said in October, “I have known and respected Ken Tapp and the projects he has been developing for years now. Having been a Board Member for one of his companies I have been able to review, in detail, some of his work. Now, as a form of partnership, I am excited at what we may be able to do together.”

In November 2023, Decentral Life filed a quarterly earnings report citing a total revenue of $173,187 and a net loss of $86,828. As of September 30, 2023, the company had $77,910 of cash, an accumulated deficit of $32 million, and a net loss of $157,757. The filing stated, “These factors raise substantial doubt about the company’s ability to continue as a going concern.”

 

1775000-1775804-https-ecf-cod-uscourts-gov-doc1-039111020353

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.


One comment

  • Todd Kleperis

    December 13, 2023 at 12:38 pm

    Wow that is nuts. To run up 32 million in losses? This guy must have been one heck of a salesperson. That just boggles the mind.

    Reply

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