SEATTLE — A Washington cannabis farm was used in a multimillion-dollar Ponzi scheme, federal officials said.
The scheme took in $4.85 million from investors, many using retirement funds or family loans, who were enticed by promises of enormous profits from Green Acres Farms near Anacortes, according to a Securities and Exchange Commission complaint.
Robert Russell, of Duvall, and his California film executive partner, Guy Scott Griffithe, spent $3.5 million of investors’ money on luxuries including a 2008 Bentley Continental, a 2012 Mercedes Benz C-Class, a 2015 Porsche Panamera and a yacht, the SEC said.
The SEC complaint filed Jan. 21 in federal court in Santa Ana, California, charges Russell and Griffithe with civil violations of federal securities law and seeks return of “ill-gotten gains.” No criminal charges have been filed.
Neither Russell nor Griffithe could be reached for comment. An attorney who is reportedly representing Robert Russell, did not respond to an interview request.
“Griffithe and Russell exploited popular interest in the cannabis industry to obtain millions of dollars from investors who thought they were buying into a profitable business,” said Melissa R. Hodgman, associate director of the SEC’s Enforcement Division, in a statement.
Federal officials say the case is symptomatic of the gold-rush mentality of cannabis sales. in Washington, where a recreational marijuana market opened in 2014. It also underscores the challenges of an industry where high startup costs and scarce bank financing might tempt operators to seek investment outside state-approved channels, The Seattle Times reported Sunday.
State records show violations of the of the state’s cannabis investment laws climbed from 11 in 2016 to 49 in 2019.
The SEC said Green Acres Pharms was never profitable, the SEC said. The Washington Sate Liquor and Cannabis Board has permanently discontinued Green Acres Pharms’ license to produce and process cannabis.
Investors were told their money would pay for new farm equipment or land for a farm expansion, the SEC said. Investors and prospective investors were given farm tours and were shown “obsolete or surplus equipment and fixtures that (Robert Russell) falsely said were going to be installed when he received money from their investments,” according to the SEC complaint.