The Ontario Securities Fee is mounting its initially fraud scenario in Canada’s hashish sector.
In a assertion of allegations designed general public Friday, the regulator alleges that investor resources raised by Canada Cannabis Corp. ended up “misused.”
In addition, a few folks associated with the organization are accused of earning deceptive statements in communications with traders.
None of the allegations in opposition to Canada Cannabis, Benjamin Ward, Silvio Serrano and Peter Strang have been demonstrated. An initial hearing is scheduled to take area Sept. 30 in Toronto.
The OSC suggests Canada Hashish elevated about $3.two million and US$8.8 million from about 125 traders — about 50 % in Ontario — concerning 2014 and 2016.
“Ward, Strang and Serrano represented to buyers that their money would be used to build and operate CCC (Canada Hashish),” staff members of the regulator allege.
“Instead, Ward, Strang and Serrano syphoned off far more than $3 million from CCC by producing a loan to a enterprise owned by Serrano.”
OSC workers allege that an investor temporary dated Jan. 16, 2014, which was used to solicit traders, contained “numerous untrue statements,” these types of as what Canada Hashish owned and Ward’s academic achievements.
It is also alleged that whilst Canada Hashish Corp.’s first small business program was to apply for and receive a licence to improve and market health care hashish production in Canada, traders have been not explained to a 2014 licence software to do so was withdrawn in 2016.
In the 8-site statement of allegations, OSC staff members allege that Ward, Strang and Serrano “devised a scheme whereby CCC (Canada Hashish) would use investor cash to purchase an fascination in and make a personal loan to Growlite,” a organization that was owned by Serrano.
The adult men are alleged to have attained a “handshake” agreement to use $one million of trader money to purchase a 45 per cent desire in Growlite, with no choosing a valuator or addressing the conflict arising from investing in Serrano’s firm.
They are accused of using a even more $three million of investor funds to finance a personal loan to Serrano’s organization.
“Ward, Stang and Serrano applied the financial loan to defraud traders,” OSC personnel allege in the document, introducing that funds were being “directed away from the organization of Growlite and to the gain of Serrano and Strang, their households or businesses controlled by them.”
The Respondents engaged in or participated in acts, techniques, or courses of carry out relating to securities that they realized or moderately should to have recognized perpetrated a fraud.
OSC assertion of allegations
The doc asserts that the bank loan was inevitably published off with out any try to gather desire payments or get well any of the principal.
“By the drop of 2016, Ward, Strang and Serrano experienced resigned from CCC, leaving driving a business depleted of all trader money with no ever getting engaged in the cultivation or distribution of hashish,” OSC staff allege.
If the allegations are verified, the regulator can impose economical penalties of up to $one million for each breach of the Ontario Securities Act.
Workers of the regulator are also seeking disgorgement by the three individuals of “any amounts obtained as a result of non-compliance” with securities legislation.
“Ward, Strang, Serrano, and CCC (Canada Hashish) elevated tens of millions of bucks utilizing the Investor Quick, which contained untrue statements, and then positioned investors’ money at hazard by diverting investor cash away from CCC for their have particular gain,” OSC staff allege.
“The Respondents engaged in or participated in acts, procedures, or classes of perform relating to securities that they understood or reasonably ought to have identified perpetrated a fraud.”