The CEO of Altai, a company producing gourmet marijuana candies distributed to over 100 dispensaries in California, faces a lawsuit from an investor. The investor maintained anonymity by having Hannaford Enterprises, LLC, bring the suit against Indus, the holding company of Altai. According to court filings, the investor claims that the CEO squandered the $750,000 that was entrusted to Altai.
Instead of using the investment to further the position of the company, the CEO allegedly spent it on private jets and stays at luxury hotels, such as the L'Ermitage in Beverly Hills and the Four Seasons. The legal complaint also states that part of the money went to pay legal bills for a separate securities fraud case against the CEO. Additionally, the lawsuit accuses the CEO of firing Altai's CFO to hide the alleged misuse of funds.
The court papers detailed other allegedly fraudulent acts, such as misleading investors with false statements, doctoring corporate documents and engineering an artificially high stock price. The punitive measures that the investor hopes to achieve with the lawsuit include invalidating the CEO's 39 percent ownership of the company and gaining a settlement for damages.
A person in a similar situation who has been charged with fraud could ask an attorney to plan a defense. An attorney could consult with an accountant and study the relevant financial documents. Evidence might be challenged by the attorney if it does not clearly meet the legal standards for proving the specific charges. An attorney could also argue that the defendant lacked the specific intent to defraud, which is an essential element of a fraud charge.
Source: Buzzfeed, "An Investor Is Suing A California Edible Pot Company For Fraud", Amanda Lewis, July 24, 2016