The U.S. Securities and Exchange Commission ordered Integrated National Resources Inc., doing business as WeedGenics, and its owners, Rolf Max Hirschmann and Patrick Earl Williams, to stop an alleged ongoing offering fraud and Ponzi-like scheme.
Hirschmann and Williams, who raised over $60 million from investors to expand their cannabis operations, allegedly utilized the majority of these funds for $16.2 million in Ponzi-like payments and to personally enrich themselves, the agency said on Tuesday.
Since June 2019, the duo has been promising investors returns of up to 36% from the expansion of WeedGenics facilities. But the SEC alleges that “Hirschmann and Williams never owned or operated any facilities—it was all a sham.”
Authorities found that the two allegedly transferred investors’ funds through several accounts for personal use, including entertainment, jewelry, luxury cars, and residential real estate.
Hirschmann, who acted as the company’s face, allegedly used the pseudonym Max Bergmann when communicating with investors. Williams, who served as the company’s vice president, reportedly used the investment money for his public career as a musician under the name “BigRigBaby“.
“Rolf Hirschmann and Patrick Williams allegedly had no real company, no product, and no business, yet despite this, they promised investors everything and then delivered nothing,” Michele Wein Layne, director of the SEC’s Los Angeles Regional Office, said in a statement.
The U.S. District Court of Central California gave the SEC the green light for immediate action against WeedGenics, its owners, and several others involved in the case. The court’s order includes preventing the accused from continuing their operations, freezing their financial assets, and putting a temporary manager in charge of the company.
A court date has been set for June 2, where decisions will be made about extending these restrictions and possibly appointing a permanent manager to oversee the company’s operations and assets.
The SEC has accused the company and its owners of violating laws that protect against fraudulent business practices. The agency is seeking a number of outcomes from the court. These include permanent court orders to prevent the accused from repeating such fraudulent activities and requiring them to give up any profits made from illegal actions, with interest.
The agency is also asking for fines to be imposed and for those involved to be banned from holding executive or director positions in any company in the future. It is also hoping to recover profits from those who benefited indirectly from the fraudulent activities, with added interest.