SEC Charges Cannabis Company American Patriot Brands, CEO With Fraud

The Securities and Exchange Commission has charged American Patriot Brands Inc., a cannabis cultivation and distribution company, its CEO, and five other entities and individuals for fraud.

According to a statement from SEC, they have been charged for participation in a long-running scheme in which they raised more than $30 million from more than one hundred investors across the country and siphoned off millions of those funds to enrich themselves.

According to the SEC's complaint, filed in the United States District Court for the District of Puerto Rico, since at least mid-2016, APB, its CEO Robert Y. Lee, and current and former executives Brian L. Pallas and J. Bernard Rice made a series of false and misleading statements to investors about various aspects of the company, including its financial condition, the scope of its operations, the value of its Oregon cannabis farm, and the safety and security of investing in APB.

"As the SEC complaint alleges, American Patriot Brands Inc. and some of its senior executives fabricated business profits and prospects to entice investors with falsehoods that in the end left investors with essentially worthless securities," said Carolyn M. Welshhans, Associate Director of the SEC's Enforcement Division. "This action reflects the SEC's ongoing commitment to holding accountable those who seek to profit through lies and deception."

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