MedMen Enterprises Inc. (MMNFF) is facing a new lawsuit from the company’s former Chief Financial Officer James Parker. Parker filed his case on January 29 in the Superior Court of California in the County of Los Angeles claiming wrongful termination for an undetermined amount of damages.
MedMen spokesman Daniel Yi said that the company was unable to respond to the filing because it had not been officially served, but would do so once that happened. “These are baseless claims and we’ll defend ourselves vigorously in court,” said Yi.
Parker resigned from the company in November less than a year after the company began trading on the Canadian Securities Exchange following a reverse take over. It’s highly unusual for a company to experience a change at this level so quickly after becoming a publicly traded company. At the time, Jim Miller, who was the Vice President of accounting was appointed as the interim CFO and then in December MedMen named Michael Kramer as its official CFO. Kramer worked previously in senior jobs for retailers such as Apple Inc., Abercrombie & Fitch and Forever 21.
The allegations are harsh. Parker says that he to “Choose between complying with his fiduciary duty to the company and its shareholders or turning a blind eye and a deaf ear to improper and unlawful behavior, he had been constructively and wrongfully terminated without cause and in violation of public policy.” Parker claims MedMen went behind his back to begin searching for a new CFO and diminished his authority within the company.
He also complained that the company instructed him to make payments that he questioned.
“Plaintiff was ordered to spend several millions of company dollars on such items as 24-hour armed Executive Protection (security) for the CEO, President, and their families, high-tech safe rooms and security systems for their new houses, personal drivers, private jets (often with friends and family along for the ride), luxury hotels, special order pearl white Escalades for the CEO (and another car for his family), a custom $160,000 Tesla SUV demanded by the President, tens of thousands of dollars apiece on multiple extravagant custom conference room tables, and placing CEO Bierman’s personal therapist and marriage counselor on staff fulltime as a “performance improvement expert” at a pay rate in excess of $300,000 a year.”
Parker alleges that Bierman and President Andrew Modlin engaged in inappropriate name-calling.
“Mr. Parker was forced to tolerate being ridiculed by CEO Bierman and President Modlin for the way Plaintiff dressed (not hip enough to satisfy the Founders’ millennial culture); being called “fat and sloppy”; being called a “pussy-bitch;” having his office diminished in size; assigned to a shared a parking space with his executive assistant while less senior VP’s and Administrative Assistants had their own exclusive spots; subjected to hearing CEO Bierman’s racially inappropriate reference to Los Angeles City Councilman Herb Wesson as a “midget negro” and the CEO’s characterizations of cannabis social equity programs as “reparations”; CEO Bierman’s references to a representative of the Drug Policy Alliance as a “fat, black lesbian;” CEO Bierman’s and President Modlin referring to women in conflict with them as “cunts” and those with different ideas or perspectives as being “retarded;”
Parker also made serious securities violation claims saying:
- “Ordering Plaintiff to wire hundreds of thousands of public dollars to a “consultant” in Canada to “buy up our stock when it is under attack”
- “Ordering Plaintiff to pay prohibited success fees to unlicensed broker-dealers for various fundraising efforts, under the semblance of “consulting agreements”
- “The CEO and President not being fully transparent about non-arm’s length deals with numerous related parties (including Pharmacann and Captor Capital)”
- “The CEO and President failing to publicly disclose all Named Executive Officers and other Material Officer compensation packages (in violation of Canadian National Instrument Form 51-102 F6 which requires that the compensation of the CEO, CFO and next three highest-paid executives be publicly disclosed)”
Parker also claims that Bierman and Modlin have continued to treat the company as if it were still a private company and not one owned publicly by shareholders.
“Plaintiff having to deal with all of the resulting cultural fallout at the company; relegated to using his personal American Express card to fund company purchases ranging from $150,000-$250,000 a week because CEO Bierman and President Modlin, and Defendant could not obtain credit cards with high enough limits since MM Enterprises was in the cannabis industry”
MedMen Claims Performance Issues
Within the case, Parker included emails from Andrew Modlin suggesting the company was unhappy with Parker’s performance leading to his ouster.
Modlin wrote, “You have engaged in other serious neglect in the performance of your duties and you have willfully and repeatedly failed and refused to perform your duties. We will be providing you with a more detailed description of your performance deficiencies shortly as well as a plan for curing those deficiencies.”
In another email stated in the case, Modlin wrote, “We are taking the time to thoughtfully memorialize the myriad well-documented deficiencies in your performance so that both you and MedMen can understand what is expected of you in your very well compensated position. Given the amount of your base salary, the annual bonus available to you, and the value of the equity grants given to you, MedMen has every right to expect you to perform your job duties
Parker was being paid $750,000 a year and if he was terminated without cause he would receive $2.2 million. In addition to other lump sum payments and unvested stock options. However, the filing states that damages would be determined in court.
MedMen is facing another lawsuit. Brent Cox and Omar Mangalji founders of The Inception Companies founders (through an affiliated entity – MMMG-MC, Inc. – that holds a significant stake in MedMen’s management company MMMG, LLC) filed a complaint against Adam Bierman; Andrew Modlin and various MedMen Enterprises (OTC: MMNFF) entities for alleged breaches of fiduciary duty. A Los Angeles Superior Court though denied a request from the plaintiffs for a temporary restraining order and a preliminary injunction and giving the company a slight early victory.
However, similar to Parkers claims that Bierman and Modlin are self-dealing when it comes to the company, Cox and Mangali also stated, “MedMen veneer is a complex web of interconnected subsidiary entities, virtually all of which are directly managed, directed, controlled, and owned by BIERMAN and MODLIN, and all of which always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity. It is that perverse interconnectedness and rampant, brazen self -dealing that renders the actions of BIERMAN and MODLIN, and of the Entity Defendants, unlawful.”
February 5, 2019 at 3:52 pm
I’m an investor in fund 1 and fund 2 and can say I’m rather happy with the way things have been handled. My investments have more than quadrupled so to say “always pursue the best interests of BIERMAN and MODLIN, rather than the best interests of any stakeholder or entity.” seems false. I think The investors and Adam and Andrew’s interests are in alignment.