An Arizona CBD firm has been accused of embezzling millions of investor money and getting a PPP loan in allegedly fraudulent circumstances.
The owners of Integrated CBD (ICBD) allegedly defrauded investors and, on top of that, applied for an emergency pandemic-relief loan. The owners are accused of engaging in fraudulent behaviour to finance their lavish lifestyles. Some of the money is said to have been used to purchase a private jet.
According to the case filed in a Maricopa County court, the company laid off all of its employees several months before receiving around $350,000 under the US Paycheck Protection Program (PPP). The loan was meant to assist in paying off the employees’ payroll.
The lawsuit alleges that the ICBD’s owners bankrupted the company and used investors’ money to enrich themselves. This is the first case to accuse a cannabis firm of PPP fraud.
The lawsuit lists the company’s CEO Patrick B. Horsman and two other leaders as perpetrators of the scam against investors, with Horsman identified as the ‘mastermind.’ The three businessmen are said to have awarded themselves $12,500 each per month.
The lawsuit further says that investors were made to believe in a 2019 presentation that the company had the blueprint for becoming a multi-million dollar entity. In reality, the firm did not possess the size and quality of land it claimed it did. And earlier this year, Horsman allegedly instructed the investors to inject more money into the business or else it will crumble.
Horsman is alleged to have laid off ICBD’s staff in February 2020—a move investors claim had nothing to do with COVID-19—and then applied in April for the emergency loan.
As a move to deter PPP fraud, The US Department of Justice has taken swift measures to protect the program. So far, 50 people have been charged in connection with PPP fraud.