A pair of former employees at a California marijuana company who tried to blow the whistle on millions of dollars worth of cannabis counterfeiting and diversion are now facing a lawsuit from their ex-boss, who denied all wrongdoing and claims instead that the two employees were thieves.
The cross-complaint, filed May 1 in Sacramento County Superior Court by Top Shelf, dba Cannazon, levies seven charges against George Engers and Garrett Webb, including fraud, misappropriation of trade secrets, breach of fiduciary duty, and more. The suit charges that the two stole an undetermined amount of money that should have been paid to the retailer’s suppliers, and seeks damages of at least $250,000.
Apart from the finger-pointing, with both sides accusing each other of serious wrongdoing, even the very work titles of Engers and Webb appear to be a matter of dispute: Engers said he was chief operating officer and Webb was general delivery manager, but the cross-complaint identifies them as a manager and dispatcher, respectively.
On top of that, the cross-complaint charges that Engers and Webb stole from Top Shelf, contrary to the narrative laid out in the lawsuit for wrongful termination that the pair filed last November, which alleged that the primary owner of Top Shelf, Quan Le, was diverting legal cannabis to the illicit market and counterfeiting popular marijuana products from brands such as Jeeter.
“Engers enlisted the help of Webb and together they wrongfully took – for their personal use – Top Shelf’s funds that were to be used to pay Top Shelf vendors,” the cross-complaint alleges, after outlining that Engers was the sole employee in charge of the company safe and cash with which to pay suppliers.
The suit says that the full extent of the theft isn’t yet known, because Engers took with him a heap of company records and passwords when he left, which Top Shelf says it still hasn’t recovered. So it’s unclear, the complaint alleges, how many fraudulent “transactions” took place on Engers’ watch.
“The full nature and terms of many of these transactions are still unknown to Top Shelf as a result of Cross-Defendants’ concealment of those facts and continued control over the records,” the cross-complaint reads. “Vendors/suppliers insisted (and still insist) that Engers did not pay them.”
But, the cross-complaint states, in mid-September last year, the company’s owners “learned that Top Shelf’s inventory was roughly 10% of what it should have been.”
Two days later, Engers abruptly walked off the job and took with him a trove of business records, such as customer purchase histories and human resource files, the cross-complaint alleges.
The cross-complaint – which was only filed after Green Market Report contacted Top Shelf representatives about the allegations made by Engers and Webb – also charges that the two “made false allegations” about Top Shelf counterfeiting California cannabis brands Jeeter and STIIIZY.
“Those allegations were and are absolutely false,” the cross-complaint states.
The two previously told Green Market Report that they were both forced out of Top Shelf as retaliation for reporting to state and federal authorities that company leadership was engaged in both counterfeiting and diverting legal cannabis to the illegal market. The two filed suit against Top Shelf in November last year after being fired in September.
Engers and Webb could not be reached for comment, but one of their attorneys, Corey Bennett, wrote in an email that the cross-complaint is “filled with false allegations that were concocted only after they learned that (Engers and Webb) had reported counterfeiting to the Department of Cannabis Control and filed a lawsuit for wrongful termination.”
Bennett told Green Market Report, “Since we filed this lawsuit, my phone has rung off the hook with people who have known and worked with defendants for years reaching out to offer information and assistance. We have hundreds of text messages showing … that (Engers and Webb) raised concerns about potential malfeasance, not the other way around. We look forward to presenting this evidence to a jury.”
Engers and Webb alleged that Top Shelf and its associates have diverted at least $2.1 million in legal marijuana products and counterfeited an unknown number more, and that both activities are ongoing because authorities have not acted on the evidence the two provided.
The two also alleged that the diversion was aided by executives at Jeeter and STIIIZY, a claim which both companies denied.
Top Shelf currently holds active distribution, delivery, and manufacturing marijuana permits in Sacramento, according to the California Department of Cannabis Control’s database.
Both lawsuits are still pending. A case management hearing is scheduled for Sept. 1.