Cannabis bad boy Dan Bilzerian and his company Ignite Brands (CSE: BILZ) have asked the Securities & Exchange Commission for a break while it faces criminal charges. The SEC has just said no and is now suing the company.
In a case filed earlier this week, the SEC is suing Ignite Brands Ltd. for failing to produce documents as it attempts to pursue an accounting fraud investigation. Ignite wants the investigative subpoena “stayed” as the criminal authorities conduct a criminal investigation. The SEC argues that just because the company is facing multiple investigations, it can’t ask the SEC to stand down. The SEC’s case exposed that Ignite confessed it it under a criminal investigation.
According to the SEC case, “SEC staff have uncovered information indicating that Respondent may have filed public financial statements that include false or misleading representations regarding revenues earned and recognized in the company’s fiscal year ending December 31, 2020.”
In May of 2022, the SEC told Ignite’s counsel that the company needed to provide certain documents. The company said it would comply by June 15, but then asked for an extension to July 15. On June 30, some documents were sent to the SEC, but it wasn’t everything they had asked for while the company described it as a meaningful start.
According to the complaint, the SEC asked for documents relating to Ignite’s accounting policies on revenue recognition and other accounting issues; Ignite’s internal financial reporting; Ignite’s internal audit work papers; communications between Ignite and its external auditor on revenue recognition; Ignite’s sales forecasts and budgeting; Ignite’s general ledgers and journal entries for certain sales transactions; and the underlying sales documentation for Ignite’s revenue-generating businesses. Instead Ignite sent copies of third-party agreements for various services related to Respondent’s products, Board meeting minutes, and internal organizational charts.
Then Ignite asked for another extension to August 1 and ultimately, the SEC agreed to an extension to August 23. Instead of complying, Ignite asked for a pause in the investigation. The SEC’s response was to ask a court th force the company to deliver the requested documents.
Ignite was founded in 2017 by Dan Bilzerian who made a splash with his social media posts of beautiful sexy women, guns, and his own muscular frame. Bilzerian initially became known for being a winning poker player, but some claimed his winnings were embellished. According to Bloomberg, in July 2020, former Ignite president Curtis Heffernan sued Bilzerian for wrongful termination. Heffernan claimed that he was fired for criticizing Bilzerian’s misappropriation of company funds for his lavish lifestyle. Bilzerian spent a million dollars to appear in the film Lone Survivor and then sued the filmmakers because his screen time was cut from the agreed-upon eight minutes to one minute.
The company reversed course from being a publicly traded stock and went private as of August 29. The company said in a press release, “Ignite’s shares are thinly traded and offer little opportunity for liquidity for shareholders; b) the expenses of being a public company outweigh the benefits; and c) the proposed Consolidation provides shareholders, other than shareholders who will remain following the Consolidation, with a meaningful liquidity event that provides an opportunity to realize the value for their shares at a significant premium to current market prices.”