It may have taken a while but former Doyen Elements CEO Geoffrey Thompson was charged last week in federal court in Chicago for ripping off cannabis investors to the tune of $950,000. Thompson was charged with one count of wire fraud and the arraignment is set for Dec. 9, 2021, at 11:30 a.m., before U.S. District Judge John F. Kness. Wire fraud is punishable by up to 20 years in federal prison. According to a notice from the Department of Justice, the charge was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Emmerson Buie, Jr., Special Agent-in-Charge of the Chicago Field Office of the FBI. The government is represented by Assistant U.S. Attorney Matthew Getter.
Last year. Thompson agreed to a settlement with the Securities and Exchange Commission (SEC) for an amount over half a million. The settlement was related to stock fraud associated with Accelera Innovations and Synergistic Holdings. Thompson had agreed to a payment of $350,000, representing profits gained as a result of the conduct alleged in the Complaint, along with prejudgment interest in the amount of $ 74,849.97, for a total of $424,849.97. In addition to that, Thompson has agreed to pay a civil penalty in the amount of $100,000 in the form of four payments of $25,000 each. He is also barred from serving as an officer of a public company for five years and from participating in an offering of penny stock, including engaging in activities with a broker, dealer, or issuer for purposes of issuing, trading, or inducing or attempting to induce the purchase or sale of any penny stock.
Thompson continually told investors that an IPO of the company he was raising money for was imminent when it was not. He raised $952,000 and used most of the money for personal expenses. The complaint also stated that Thompson told investors that the company had secured access to bank financing, when it had not, and represented to investors that the company had revenues resulting from an acquisition of another company when it did not
It was a classic ponzi scheme in that Thompson is accused of using newer investor money to pay out to older investor money to assure them that their investments were secure.
The statement did note that the information is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
In September of 2017, the SEC alleged that Thompson, acting through a company called Accelera Innovations Inc. and Synergistic Holdings LLC, sold approximately $1.7 million worth of Accelera stock to investors and that the sale was not registered or subject to an exemption from registration. At the same time that the SEC filed the complaint about Thompson and Accelera, Thompson and Doyen Elements were selling shares online.
Beginning in 2011, Thompson, through the limited liability company which he co-owned with his wife, GNNT, LP, owned and controlled Synergistic Group, LLC. Synergistic was a commodity pool operator, commodity trading advisor, and investment adviser that was registered with the State of Illinois. Thompson was the Managing Member and Chief Compliance Officer of Synergistic Group, LLC. Through GNNT, LP, Thompson owned at least 75% of Synergistic Group, LLC.
The Commission’s complaint in that matter alleged that from approximately January 2012 through September 2014, Thompson, acting through Synergistic Holdings, LLC and Accelera Innovations, Inc., sold at least 849,886 shares of Accelera common stock to 69 investors for a total of $1,700,301. The complaint further alleged that there was no registration statement in effect for the sales of the shares and that the sales were not exempt from the registration requirements. The complaint further alleged that $1.3 million of the $1.7 million in proceeds from the sale of Accelera common stock was deposited into an account controlled by Synergistic Group.
Shareholders have been confused over the Doyen situation. They invested money into Doyen Elements and when their money disappeared, they learned there were two Doyens. At the time, Thompson said the confusion stemmed from the fact that there was Doyen International (Canada) and Doyen Elements (U.S.). Thompson said the Doyen Elements company is the group that is ignoring shareholders and has renamed itself Reach Genetics. He said that this is the company these shareholders really invested in, not Doyen International.
He said that Doyen International sued Doyen Elements accusing the group of hijacking the Reg. A fundraising and requesting that they stop using the Doyen name. In March 2019, Doyen International announced it was rebranding and renaming itself to Covalent Collective. In addition, the company announced Bill Gregorak would be the Chief Executive Officer. Prior to being named CEO, Mr. Gregorak served as Chief Financial Officer of Covalent Collective since February 2018. Mr. Gregorak takes over as CEO from Geoffrey Thompson, a co-founder of Covalent Collective, who will continue as leader of the merger and acquisitions because Thompson was in the process of agreeing with the SEC that he would not be a director of a company.
In June 2019, the SEC filed a subpoena enforcement action in the U.S. District Court for the Northern District of Illinois against Covalent Collective, Inc. f/k/a Doyen Elements International, Inc. f/k/a Advantameds Solutions, Inc. (“Doyen”) for failure to produce documents in an investigation. The SEC’s application alleges that Doyen, through its founder, Geoffrey Thompson, may have violated the registration provisions of the securities laws by engaging in an unregistered offering of securities and may also have made misleading representations to investors and potential investors about the operations, acquisitions, and projected stock price of Doyen and related entities.
As part of its investigation, the staff in the SEC’s Chicago Regional office served Doyen with a document subpoena on October 24, 2018. The SEC’s application alleges that Doyen repeatedly refused to produce any documents in response to the subpoena, notwithstanding multiple efforts by the SEC to secure its compliance. The company finally gave the SEC the documents in July 2019.
“When we submitted our document production on July 23, 2019, we were confident that we had provided everything necessary to comply with the SEC’s subpoena,” commented Mr. Bill Gregorak, CEO of Covalent Collective. “It is gratifying to have received confirmation from the SEC and we are happy to be able to put this issue behind us and move forward with our corporate strategy of acquiring assets in our geographic priorities.” The only thing that Covalent had put behind it was giving the documents requested with the investigation, not that the investigation was ended.
Covalent Collective raised millions of dollars from cannabis investors and planned to buy a property called the Colorado 16 (CO16). Now the company is asking those investors for more money to fight a lawsuit over the acquisition and is accusing its former director Geoff Thompson of being a co-conspirator with the CO16 sellers. Covalent spent roughly $9 million on the failed Colorado 16 acquisition.
Black Bear Farms
The situation of this company gets even messier and more tangled with the current owners of Covalent. Various emails to the shareholders, which Green Market Report has reviewed explain how Covalent shareholders would receive a part of a cannabis farm called Black Bear Farms so that their investments won’t be zeroed out. Black Bear also operates as a company called Cultive. Covalent’s President Sal Milazzo is also President of Cultive. Gregorak recently told Covalent shareholders in an email, “Covalent shareholders collectively own the majority of both Black Bear Farms and AmaVie.” Yet, in a later email, Gregorak stated that Covalent shareholders only owned a 5% interest in Cultive (or Black Bear Farms).
More confusing is a letter from Milazzo as President of Cultive saying that the company was acquiring Covalent. Gregorak stated in another email that Cultive had a valuation of $49 million. This valuation is hard to verify as one shareholder complained he had never seen a financial statement.
There is also apparently a rogue group of angry shareholders sending around information to other shareholders that Gregorak has referred to in his communications. However, Green Market Report hasn’t seen those emails and can’t verify their existence.
Unfortunately for the shareholders who were duped, they will likely never get their money back. It may be cold comfort if Thompson is found guilty and sent to jail. However, the saga of Covalent/Cutive looks as if it will carry on for some time and Green Market Report will keep an ear to the ground if more news develops.