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Cannabis company alleges stock manipulation


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#1 SkunkyAroma

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Posted 13 September 2014 - 04:12 AM

Cannabis company alleges stock manipulation

By Michael Pollick

September 12, 2014

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Cannabis-Rx, which is renovating industrial space in Sarasota County that could be used as a medical marijuana-growing operation, says it has been victimized by a stock-manipulation scheme.

A multi-count indictment unsealed this week in federal court in Brooklyn, New York, charged six people with orchestrating a $500 million offshore securities fraud and money-laundering scheme involving U.S. microcap stocks.

Criminal prosecution will be handled by the U.S. Attorney for the Eastern District of New York, following an investigation by the FBI, the Securities & Exchange Commission and the Internal Revenue Service.

“We were shocked to learn of the indictment alleging that certain Cannabis-Rx shareholders participated in illegal activities to manipulate our stock,” Llorn Kylo, the company’s chief executive, said in a statement.

Kylo said that Cannabis-Rx’s “law-abiding shareholders are victims of this alleged scheme.”

“Despite this unfortunate development, our day-to-day operations are proceeding as usual and our team remains focused on executing our strategic growth initiatives,” Kylo said.

The indicted defendants are Robert Bandfield of the U.S.; Andrew Godfrey of Belize; Kelvin Leach of the Bahamas; Rohn Knowles of the Bahamas; Brian De Wit of Canada; and Cem Can of Canada.

Units of IPC Corp., Titan International Securities, Legacy Global Markets SA and Unicorn International Securities LLC also were charged.

The SEC charged Bandfield and Godfrey on Tuesday with helping clients evade U.S. securities laws by concealing ownership of stocks.

Under federal securities laws, owners of more than 5 percent of a stock are required to report their holdings to the SEC.

The SEC alleges that Bandfield and Godfrey, through IPC Corporate Services, helped clients avoid reporting requirements.

There is no mention of either Bandfield or Godfrey in Cannabis-Rx filings with the SEC.

De Wit and an unnamed U.S. client are alleged to have manipulated the stock of the Scottsdale, Arizona-based company — which trades under the ticker symbol “CANA” — through orchestrated transactions between March 27 and and April 16.

On March 28 alone, De Wit received at least five telephone calls from the client with instructions to fraudulently trade CANA’s stock, the FBI alleges.

CANA’s stock, which had not traded since July 2, 2013, had a trading volume of 189,800 shares that day. Ultimately, CANA’s stock price plummeted from $13.77 per share in late March to 50 cents per share in mid-April, the FBI said.

Cannabis-RX is renovating a former Wellcraft boat plant in southern Manatee County it acquired for $1.26 million.

“Given the current push to legalize medicinal marijuana in Florida, we believe this well-located property would serve as an ideal location for a licensed grow facility and/or distribution center,” Kylo said shortly after the acquisition.

The company changed its name to Cannabis-Rx from Longview Real Estate in January.

In all, Cannabis-Rx has 154 million shares outstanding. Priced at 29 cents per share, the company has a current market capitalization of $44.7 million.




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