Executives at a CBD firm in Arizona are being accused of wasting millions of dollars of company money, stealing from investors, and diverting pandemic-relief funds. The owners of the business reportedly bought a private jet and other luxury goods with company funds.
Integrated CBD, prior to the pandemic, had 50 employees on the payroll. The company received $350,000 as part of the U.S. Paycheck Protection Program (PPP) to help cover payroll for those employees during the crisis. They received these funds after all of the employees were already laid off and continued to be out of work as the owners spent the funds.
Investors in the company filed a lawsuit against Integrated CBD, accusing the owners of running the company into the ground and lining their pockets with cash from their investors. No criminal activity was filed, but this marks the first cannabis company to be accused of PPP fraud.
The three men under scrutiny are CEO Patrick B. Horsman, COO Jeffrey M. Dreyer, and Agricultural Business Development Head Ari M. Schiff. All of the men were involved in the alleged scheme, paying themselves $12,500 a month.
Horsman purchased a $1 million private jet a month after the company closed. He registered the Canadair Challenger 600 with the FAA the day before the company received the PPP funds according to the Miami Herald. The CEO registered the plane under a Montana company he managed. Horsman also spent up to $2 million of company money to pay off credit cards and personal debt.
The trio apparently lied to investors to attract investments. A presentation they gave investors outlined how the company planned to grow industrial hemp and extract CBD, selling it to industrial companies and large brands wholesale.
The executives claimed to have raised $50 million in senior secured debt and had $70 million in total debt and equity capital. They boasted of having a deal to farm 10,000 acres of Arizona land. In reality, they only secured 8,524 acres which weren’t farmable because of poor soil quality and access to water.