SEC Archives - Green Market Report

Debra BorchardtJuly 17, 2023


Fund manager Martin Sumichrast looks like he admitted his guilt in a fraud case while simultaneously claiming through his lawyers that the claims were outrageous, according to a report in Law360.

The original case dates back to May 2022, when the SEC accused Sumichrast the former Chief Executive Officer of cbdMD (OTC: YCBD) of misappropriating fund assets and engaging in several unauthorized transactions designed to benefit himself at the firm’s expense. He resigned from the company in June 2022.

In the latest filing, the SEC wrote:

Sumichrast admits engaging in all of the transactions alleged in the Complaint, without first making the disclosures required by the Advisers Act or obtaining the necessary consents. Because there are no material facts in dispute, the Securities and Exchange Commission is entitled to judgment as a matter of law on its claims under these statutes.

Law360 wrote that the SEC is hoping for a judgment prior to a fraud trial. Sumichrasts’ lawyer Ellyn S. Garofalo told Law360, “We are vigorously defending this. This is based on legal theories not supported by statutes or decisional law.” She also told Law360 that she believes the SEC is targeting Sumichrast for failing to detect a Ponzi scheme created by his former business partner Richard Siskey. Siskey died by suicide shortly after the investigation into the Ponzi scheme began.

Stone Street

The allegations center upon a pooled investment vehicle called Stone Street Partners. The SEC said in its case that between 2013 and 2014, Stone Street raised $3 million through the sale of 300,000 Class B units to 16 investors at $10 per unit. Sumichrast and Siskey gave themselves 450,000 Class A units of Stone Street for free. In 2015, Stone Street held a second offering, raising an additional $8.73 million through the sale of 582,000 Class A units, at $15 per unit, to around 52 investors. The B shares were converted to A shares following that round. The two ended up owning roughly 50% of the company.

In 2016, in an unrelated situation, Siskey committed suicide when he learned of an SEC investigation into a Ponzi scheme he had orchestrated. Sumichrast then became the sole manager of Stone Street until it closed in 2020.

The SEC alleges that Sumichrast began to borrow money from Stone Street and then repay it with worthless stock in cannabis and vape companies. Stone Street’s cash on hand had dwindled dramatically, shrinking from $2.8 million as of December 31, 2015, to $176,497 as of
December 31, 2017.


When Sumichrast was CEO of cbdMD, the company bought 2.5 million shares of NuGene International. Not long after that NuGene began having financial troubles. The SEC alleges that Stone Street bought cbdMD’s NuGene shares as a way to improve the balance sheet for cbdMD prior to an IPO. cbdMD’s IPO was a success as it raised more than $12 million.

cbdMD continued to reward Sumichrast with more shares, but the SEC says that caused him to incur a big tax bill. The SEC claims that “As part of his plan to offset this taxable income, Sumichrast transferred these shares to Washington Capital, which had a suspended taxable loss
from its Stone Street shares. Sumichrast then had Washington Capital transfer those shares to Stone Street for $645,000.”

The SEC states that Sumichrast never discussed any of these transactions with the other Stone Street investors.

The company’s current leadership is Ronan Kennedy who is the Interim Chief Executive Officer and Chief Financial Officer. cbdMD last reported earnings in May with net sales for the March 31, 2023 quarter being $6.2 million versus net sales of $6.1 million quarter ending December 31, 2022, an increase of 2.5%. The net sales for the quarter were down 35% compared to the prior year’s quarter ended March 31, 2022. For the second quarter of fiscal 2023, the GAAP net loss improved to $1.4 million on sales of $6.2 million as compared to a $5.0 million net loss on sales of $9.6 million in the prior year’s comparative quarter.




StaffJuly 12, 2023


The Daily Hit is a recap of the top financial news stories for July 12, 2023.

On the Site

Pump & Dumper David Ferraro Gets Final Judgment

The U.S. Securities and Exchange Commission might finally be closing the book on the fraudulent team of Justin Costello and David Ferraro. On July 11, the agency received a final judgment against Ferraro for his role in alleged microcap stock promotion schemes that generated more than $140,000 in profits for Ferraro. Read more here.

Massachusetts Sold $152 Million in Marijuana Last Month

Dispensaries in Massachusetts racked up $132.8 million in recreational cannabis sales, and another $19 million in medical sales, for a total of $151.8 million, according to the state’s Cannabis Control Commission. Read more here.

IGC Pharma Gets Boost from Hong Kong-Based Investors

Clinical-stage pharmaceutical company IGC Pharma Inc. (NYSE: IGC) released its fiscal-year 2023 financial results on Wednesday, outlining several strategic moves to support its pursuit for treating Alzheimer’s disease. Read more here.

Tough Times Likely Ahead for New Illinois Marijuana Shops

If past is prologue, then the 55 upcoming Illinois social equity license lottery winners on Thursday are going to have a rough time actually getting their shops open for business. Read more here.

In Other News

Minnesota medical marijuana

The Minnesota Department of Health officially added irritable bowel syndrome (IBS) and obsessive-compulsive disorder (OCD) to the list of qualifying medical conditions for participation in Minnesota’s medical cannabis program, effective July 1. Read more here.

Ohio medical marijuana

On Wednesday, July 12, the State Medical Board of Ohio agreed to include irritable bowel syndrome in Ohio’s list of qualifying conditions for medical marijuana but rejected adding autism spectrum disorder and obsessive-compulsive disorder. Read more here.

StaffMay 23, 2023


The Daily Hit is a recap of the top financial news stories for May 23, 2023.

On the Site

Brad Hoch Returns as CFO for TILT Holdings as Dana Arvidson Departs

In the midst of a series of financial and operational shifts, Phoenix-based TILT Holdings Inc. (NEO: TILT) (OTCQX: TLLTF) announced a change in its leadership. The firm’s CFO, Dana Arvidson, has left the company, effective immediately, with Brad Hoch, the current accounting chief and former CFO, stepping in as interim CFO​. Read more here.

SEC Halts $60 Million Ponzi-Like Scheme by WeedGenics

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. Read more here.

Acreage Holdings Revenue Slips Slightly, High Hopes for Connecticut

Long after the markets closed on Monday, Acreage Holdings, Inc. (OTCQX: ACRHF, ACRDF) reported its financial results for the first quarter ended March 31. Revenue fell 1.6% from last year to $55 million. Sales fell sequentially by 2.7% from the fourth quarter. The net loss in the first quarter was $16 million. Read more here.

Delivra Health Brands Rises on Sales of Dream Water

For the second time this year, Delivra Health Brands Inc. (TSXV: DHB) (OTCQB: DHBUF), a consumer packaged goods company with a position in the health and wellness sector, reported positive adjusted EBITDA. Read more here.

Premium Drives Record Net Growth for Rubicon, Keeps Rosy Outlook for Segment

Rubicon Organics Inc. (TSXV: ROMJ) (OTCQX: ROMJF), a licensed producer of “organic, certified” premium cannabis, reported a notable year-over-year growth of 71% revenue growth in its first quarter 2023. The rise is attributed to robust growth in the premium cannabis segment and expansion of its product offerings. Read more here.

In Other News

TerrAscend Corp.

TerrAscend Corp. (CSE: TER) (OTCQX: TRSSF), a leading North American cannabis operator, completed the sale of its facility located in Mississauga, Ontarion, for CAD$19.7 million. Net proceeds will be used to pay down existing company debt. Read more here.


A piece of legislation signed by Montana’s governor on Monday could have foiled plans for new marijuana dispensaries, although existing dispensaries are allowed to expand operations. The new law, HB 128, extended the date for new applicants from July of this year to 2025, despite some prospective operators already investing thousands of dollars. Read more here.

Zelira Therapeutics Ltd.

Zelira Therapeutics Ltd (ASX:ZLD, OTCQB:ZLDAF), a global leader in the development and commercialisation of clinically validated cannabinoid-based medicines, executed additional binding term sheets to provide a further $3.25 million to support FDA clinical trials for Zelira’s proprietary and patented protected HOPE 1 product. Read more here.

Debra BorchardtApril 20, 2023


Unsuspecting investors trusted these cannabis companies which they now accuse of fraud. The desire to be a part of the cannabis industry and promises of quick and hefty returns have caused many investors to lose their money. Those accusations are now making their way into the court system now.


This week a couple in Ohio, Paul and Jennifer Allen filed a complaint in the Northern District of Ohio claiming that Sean Williams and the company POHIH cheated them out of a $50,000 investment. Williams was a friend of the Allens and over dinner presented the cannabis investment opportunity for POHIH’s purported farm in Macedonia as well as pictures of actual marijuana crops. The slide show contained spreadsheets of expected sales numbers and approximate quarterly dividend amounts. Williams told the Allens that POHIH had already contracted with a number of marijuana dispensaries in the United States and that once POHIH was cleared to sell marijuana-related products in the United States it would be one of the largest suppliers of cannabis oil in all of the United States. The Allens’ dividend from owning one-half of a share would net them approximately $300,000.00 per quarter.

Williams also said the company was being run by a car dealership owner in Michigan by the name of Kris Swaffer. They were told that Swaffer’s father retired and the car dealerships were sold and Swaffer used his proceeds from the sale to invest in a cannabis operation. In 2015, Swaffer formed Macedonian American K North America, LLC, a Texas limited liability company. On May 18, 2016, Swaffer formed 5 Letters, LLC, also a Texas limited liability company. According to the court documents, Swaffer’s purpose in creating these two companies was to engage in the business of growing, processing, and selling marijuana and marijuana-derived products.

Swaffer also formed POHIH to be in the business of growing, processing, and selling marijuana and marijuana-derived products. POHIH functioned as the U.S. holding company for a foreign entity named 5 Leters DOO Resen. 5 Leters DOO operated a marijuana cultivation operation in the country of North Macedonia. The Allens claim they had been told Swaffer was a business genius, but instead, the dealerships had failed, his home had been foreclosed upon and Swaffer had significant personal debt related to unpaid business loans extended to the automobile dealerships.

Neither Williams nor Swaffer had any cannabis experience. Especially since it isn’t legal to import cannabis products into the U.S.

The complaint alleges that the two raised $5.8  million from 37 different investors across several states. Despite Williams’ and POHIH’s promises and assurances, Allens never received any distributions or return on investments based upon their purchase of the one-half share in POHIH.

In September 2022, the SEC’s complaint alleged that, from at least September 2016 through February 2020, Swaffer and Williams, through POHIH and other now-defunct related entities, raised approximately $14 million from approximately 75 investors in at least 14 states for a start-up marijuana business with operations in Europe, through a series of unregistered securities offerings. “According to the complaint, while some funds raised from investors went to fund operations, Swaffer and Williams misappropriated a substantial amount of the investor funds for personal use while also misrepresenting the risks associated with investment. The complaint further alleges that Swaffer misappropriated at least $2.4 million for his personal use between September 2016 and March 2020. The complaint also alleges that Williams, in addition to being aware of Swaffer’s misappropriation, misappropriated investor funds for personal use between April 2017 and January 2020.”

The Allens want their $50,000 returned plus court costs.


In a San Diego County Court, Kate Cathlyne Torres, owner of Kilo Romeo Parliament LLC, alleged that Josh Segura ripped her off for $30,000 in a cannabis company called Suga Leaf. According to the court complaint, Segura told Torres that he needed an investment partner in a cannabis business Segura was starting called Suga Leaf. In December 2022, Segura allegedly told Torres that if she invested $30,000 with Segura, she would get her $30,000 back with 10% interest, and Torres, through her California limited liability company, Kilo, would also receive a 10% equity ownership in Suga Leaf and be entitled to 50% of all net profits derived from sales and delivery of products in San Diego County. Segura also allegedly told Torres that she needed to invest another $345 for equipment for the alleged cannabis business.

The complaint says Segura then went on to tell Torres if she invested another $5,000 with Segura, Torres would receive a 50% interest in 40 acres of real property, on Dehesa Ranch Road, El Cajon, CA, which Segura said he would purchase through a company called Cali Aquaculture LLC.  Torres invested a total of $35,345 with Segura. That wasn’t all, Torres and Segura signed an operating agreement in which Torres would be 50% owner of a film production holding company, VI XIX LLC.

By February 2023, Torres began asking Segura for tax forms and updates on the investment. However, Segura has provided no information and won’t return the money. According to the complaint, Segura has only told Torres, he’s out.

Torres is asking the courts for her money to be returned and for damages.



1598000-1598817-torres complaint

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