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In case you didn’t smell it in the air, there is a bit of a green rush around here these days. As a result, everyone from old school nickel and dime dealers to major finance figures are dumping cash into the budding ecosystem. There’s a major problem for investors though—a lot of the people who are lining up to pocket money are phonies. Which is how you get scenarios like this one (the following news, from this past Friday, via the Securities and Exchange Commission):
The SEC today announced that the federal court in Boston, Massachusetts, entered final judgments against Massachusetts-based Cannabiz Mobile, a publicly traded company purportedly servicing businesses in the medical marijuana industry, and its sole officer and director, Massachusetts resident James Gondolfe for their roles in a scheme to defraud investors.
Purportedly, of course, being the critical descriptor. According to a flowery press release that we dug up from beneath a heap of media relations horse shit, Cannabiz was “a mobile media and digital marketing Company specializing in servicing businesses in the medical marijuana and legal cannabis industry.” Furthermore, “The Company markets a subscription based, in the cloud, mobile media solution that enables care givers, dispensaries, hydroponic and ancillary product retailers the ability to create, deploy and analytically measure mobile marketing campaigns utilizing all networks and devices in the U.S.”
You’re not losing your mind. Nothing in any of those sentences makes a bit of sense. Nevertheless, by throwing a whole bunch of buzzwords in a bag and rearranging them in a sleek marketing package, the apparent criminals behind the lamely named Cannabiz were able to convince a whole lot of people that they had the coolest cannabis-infused startup in Mass to invest in. From the summary of Securities and Exchange Commission v. Christopher R. Esposito, et al.:
In May 2016, the SEC charged Gondolfe and Cannabiz, both of Cambridge, Massachusetts, along with two other individual defendants and one other company defendant, for their roles in a scheme to defraud investors by concealing the ownership and control of Cannabiz by defendant Christopher Esposito of Topsfield, Massachusetts, in order to enrich themselves by facilitating the sale of hundreds of millions of shares of Cannabiz stock into the public market …
Gondolfe’s actions allowed Esposito to pay third-party stock promoters to tout Cannabiz stock in order to increase its stock price and trading volume, sell significant amounts of Cannabiz convertible debt to others for almost $304,000, and with Pignatello and Renee Galizio of Loxahatchee, Florida, sell millions of shares of Cannabiz stock directly into the public market.
SEC spokespeople say that “litigation in this matter continues.” In the meantime, let’s take another look at Cannabiz’s PR pitch which made all those moneymen thick in the trousers:
Cannabiz Mobile enables businesses to create unique customizable personal audio and video advertisements, commercials, podcasts and presentations that are accessible via all smart phone devices.
Similar to a traditional email campaign Cannabiz Mobile enables clients to build a OPT IN databases through SMS/Texting and segregated by keyword/short codes and reach that database in the future.
Cannabiz Mobile clients are provided multiple layers of analytics to gauge their marketing spend and calculate their ROI for each mobile campaign in real time.
Who could have ever seen this coming?