Cannabis Company hit with fraud charges
Remember when retired Gen. Wesley K. Clark Sr. of Little Rock was involved with a California penny stock company that was looking to franchise food trucks, particularly to veterans?
Your Whispers staff didn’t remember it either, but back in 2012 Clark became a consultant to and in 2013 joined the board of directors of The Grilled Cheese Truck Inc. of Newport Beach.
Yum.
How well that worked out is unimportant, because Clark and every other director resigned from the board in 2016, when CEO Robert Y. “Robbie” Lee decided to get out of the food business, changed the company’s name to American Patriot Brands and bought a cannabis farm in Oregon. APB then started rounding up more than $23 million from scores of investors — many of them residents of Puerto Rico, where APB was promising to expand its cannabis operations.
Earlier this month, the U.S. Securities & Exchange Commission filed a civil lawsuit in Puerto Rico alleging that American Patriot Brands had engaged in securities fraud by misleading investors in four investment offerings since 2016. Lee and COO Brian Pallas, both of California, and former CFO J. Bernard Rice of Georgia are accused of wildly overstating the value, productivity and revenue of the cannabis operation. Then, instead of using investor money to make that pie in the sky come true, the executives spent millions on personal expenses and business acquisitions that made no financial sense.
What’s more, according to the complaint, one way APB lured in investors was by continuing to claim, long after Clark’s resignation, that someone described vaguely by the SEC as “a famous retired United States Army General” was the company’s “Chief Humanitarian and Global Economic Advisor.”
He wasn’t, of course.
Clark did make some money from the grilled cheese adventure, but APB’s sporadic filings with the SEC suggest it was not nearly as much as he expected. A consulting contract with Wesley K. Clark & Associates was supposed to pay $240,000 a year, and he did bill more than $480,000. But according to a 2015 annual report that APB filed in late 2017, Clark was paid only about $50,000. He was given shares of penny stock in lieu of $140,000, and 500,000 warrants to buy shares for $1 each expired without being exercised. The rest was “payable.”
Clark did not respond to an email last week, and the defendants who allegedly misused his name had not responded to the civil case as of Thursday.
