The war between Terra Tech Corp. (OTC: TRTC) and its investor Heidi Loeb Hegerich is heating up. The first attack began with a lawsuit filed last week by the Reno, Nevada woman claiming fraud. Loeb Hegerich entered into a partnership with Terra Tech and became a co-owner of a Blum dispensary in midtown Reno. Loeb made some 50 different claims in the case and ultimately is unhappy that she hasn’t received any money back from her investment.
Among the claims, she says she contributed $633,156, and Terra Tech has only contributed $513,706, which was not as much as they had originally agreed to invest. Loeb also claims that Terra Tech’s financials weren’t audited properly as the company claimed and that funds were commingled with other joint ventures. The lawsuit notes that in March 2018, Terra Tech’s accounting firm Macias Gini & O’Connell issued an Adverse Opinion on Terra Tech’s internal financial controls.
The 80-page lawsuit goes on to describes various financial mishaps by CEO Derek Peterson and claims that the CFO Michael James has been involved in three companies that resulted in total shareholder wipeouts.
The lawsuit also details numerous bankruptcies by Terra Tech executives, which Loeb claims wasn’t disclosed to her prior to becoming partners. Loeb also claims that Terra Tech has tried to oust her from the company.
Terra Tech issued a statement on Tuesday after the market closed refuting her claims.
Terra Tech said it will defend itself vigorously against the meritless claims filed in the State of Nevada. The company strongly denies these allegations and would like to highlight that these are only allegations by a business partner which have not been proven. Terra Tech also intends to pursue numerous counter-claims against Ms. Hegerich.
Terra Tech Chairman and CEO, Derek Peterson said, “Far from the image portrayed in recent interviews, Heidi Loeb Hegerich is, in fact, a wealthy, sophisticated investor with a history of disputes with business partners. We reaffirm our commitment to our shareholders to correct any misleading and inaccurate reports and remain committed to providing accurate information to our investors.”
The statement went on to say, “Ms. Hegerich’s lawsuit and recent interviews are an attempt to manipulate Terra Tech into paying money she is not owed. As Ms. Hegerich is well-aware, her allegations ignore the significant investment and expertise required to obtain a license and build out a retail facility. In fact, Terra Tech actually funded over 2.9 times the amount invested by Ms. Hegerich, including buying all of the product inventory to open the location and carrying operating losses until the opening of recreational sales.”
Ms. Hegerich believes the company tried to push her out of the company, but Terra Tech’s point of view is that it offered to purchase her share of the business at a greater than eight times return on her investment within two years.
With regards to the auditing of the company’s financials, Terra Tech said it “Is a publicly traded company audited by one of the largest accounting firms in the US. Additionally, MediFarm I has engaged an independent third-party accounting firm to review the books and records for the Reno business. Any allegations against the Company’s accounting practices are completely baseless in fact or evidence.” Terra Tech also claims that the accounting firm didn’t actually file an Adverse Opinion.
In the middle of this battle of words, Golden Leaf decided against pursuing a potential transaction with Terra Tech as it announced on November 5. Lucky for them it was a nonbinding agreement.
Terra Tech reported that for the last nine months ending September 30, the company reported a net loss of $34 million. The company had revenues of $24 million, but expenses of $25 million.
The company is currently involved in a lawsuit with regards to its subsidiary Edible Gardens and former partners. No doubt expenses will rise for Terra Tech as it fights multiple lawsuits.