SEC Files Suit Against Fake Cannabis Investment Firm VerdeGroup

The Securities and Exchange Commission has filed a lawsuit against Wyoming-based VerdeGroup Investment Partners, Inc. and its principal Thomas Gaffney (Gaffney), who is a repeat securities fraud offender. The SEC also included the company’s investor relations contact, Lisa Gordon. They are accused of raising more than $600,000 from over two dozen investors for a cannabis investment that never occurred. The SEC noted that Gaffney has done this before having been previously charged by the SEC and prosecuted by criminal authorities for securities fraud.

The SEC’s complaint alleges that, from January 2018 through July 2019, VerdeGroup and Gaffney raised the money to supposedly finance a legal marijuana business. Instead, the group which listed Wyoming as the company’s location used the money to fund the Florida-based Tommy’s Pizza, which was founded and run by Gaffney and his wife Cynthia Gaffney. The SEC also alleges that investor funds were used for a variety of Gaffney’s personal expenses, including Tiffany jewelry and travel on the Carnival Cruise lines. They are accused of taking $467,110 of investor money.

Unregistered Stock

Gaffney and VerdeGroup are also accused of making material misrepresentations to investors and prospective investors about VerdeGroup’s business partners and its efforts to form an initial public offering (IPO). The offering was a Private Placement Memorandum (“PPM”) that offered $25,000,000 in promissory notes at $5,000 per unit with a minimum purchase of $10,000. The PPM said that the notes would give a 12% annual rate of return that matured in 24 months and converted to equity at maturity. The IPO was planned for 2019. Investors were told the money would be used to provide high-interest loans to cannabis companies and put deposits on properties.  VerdeGroup also is said to have claimed in the PPM that it “invests in equity positions with legal marijuana companies.”

The PPM also said that VerdeGroup’s President was named Thomas Lynch, but in actuality, it was Gaffney that was running the show. The group also claimed it had filed an S-1 registration form with the SEC, but that never happened. The group ran advertisements in several states to raise money.

The SEC said that Gordon was hired by Gaffney to handle VerdeGroup investor relations and acted as an unregistered broker-dealer in connection with the offering and directly offered and sold securities by soliciting investors through phone calls and emails. The securities offering was not registered with the SEC as required by the Securities Act and some of the investors were not provided a registration statement that is required. At least one of the investors was unaccredited. Gaffney and VerdeGroup also tried to convince investors into not withdrawing funds and to encourage investors to invest more and/or rollover funds to a different entity. Gordon told Law360 that she was unaware of the complaint filed against her.

VerdeGroup claimed on its website that it was associated with the Marijuana Business Association (MJBA) and the National Cannabis Industry Association (NCIA), which wasn’t true. NCIA found out and requested that its badge be removed from the website and the company complied.

According to the lawsuit, one elderly investor asked about her supposed annual return. She received a check that had the Florida address associated with the pizza place. Once she received her check, Gordon is accused of asking her for additional investment. The woman gave another $10,000 in 2019.

Gaffney’s Past

Gaffney is listed as a VerdeGroup director in its Wyoming corporate filings. He apparently had practice at defrauding investors. the SEC sued him in 2013 when he was the CEO of Health Sciences Group, Inc., for a fraudulent scheme involving a company’s stock. That scheme involved illicit kickbacks to encourage the purchase of the stock and phony agreements to mask those kickbacks. The SEC said that Gaffney entered a guilty plea and was sentenced to time served, followed by three years of supervised release with a special condition of eight months of home confinement, among other things.

Punishment

The SEC said it wants the court to permanently prohibit the defendants from violating federal securities laws and to give back the money raised from the scheme. The agency also wants to permanently prohibit Gaffney from participating in the issuance, purchase, offer, or sale of any security in an unregistered offering by an issuer, except for securities for his own personal account. Gaffney’s wife Cynthia and Tommy’s pizza are both requested to give back money received from the fraud.

Unfortunately for investors, it looks like Tommy’s Pizza Ventures was dissolved last week and the Wyoming Secretary of State’s website indicates VerdeGroup was dissolved in April.

 

 

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.


10 comments

  • Mary Ann Abella

    November 18, 2021 at 1:10 pm

    I am one of those investors in Verde Group who has $10,000 invested. How do I file a claim against them? Thank you.

    Reply

    • dan ruess

      January 30, 2023 at 2:27 pm

      Mary Ann
      Have you heard anything about recooping our loss?
      Do you know the receiver?

      Reply

  • Mary Ann Abella

    November 19, 2021 at 1:01 am

    I was scammed out of $10,000 by Lisa Gordon of Verde Investment Partners. Who do I file a complaint with?

    Reply

    • John Sparks

      January 21, 2022 at 11:53 am

      Mary Ann, I also invested. There are a total of 24 of us. Did you receive any info if you could file suit to recover any of your money? We should combine forces and co after all parties involved.

      Reply

  • Lee Nguyen

    May 9, 2022 at 6:40 pm

    I also invested with this co. for 40K. I need to know if anyone can show how I can file the law suit to recover my investment. Thank you so much.

    Reply

    • dan ruess

      June 16, 2022 at 9:47 am

      Lee
      Do you have any info on the law suit? Is American Estate and Trust also involved in this scam

      Reply

    • Al Panico

      August 10, 2022 at 12:17 pm

      Hi. My name is Al and I am also an ‘investor’ in this fraudulent scheme. Have you heard anything on how we can file a claim against these people? Al

      Reply

  • Al Panico

    August 10, 2022 at 12:13 pm

    I am also an “investor’ in this illegal scheme. Lisa Gordon and Thomas Gaffney should be punished for what they did. Granted, I was not too bright for investing in this fraudulent scheme in the first place, but they should be made to pay us back our investment.

    Does anyone know how we can get our money back or even a portion of our money? I am a retiree and money for investments does not come easily.

    Reply

  • Al Panico

    August 10, 2022 at 1:07 pm

    Hi. My name is Al and I am also an ‘investor’ in this fraudulent scheme. Have you heard anything on how we can file a claim against these people? Al

    Reply

  • DM

    September 10, 2022 at 3:57 pm

    I’m an investor… $10K… Any new udates?

    Reply

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