Multi-Million Dollar scam shakes Cannabis Market
How This Texas CEO Lied To Investors.
A Texas manufacturer of hemp CBD inhalers allegedly attempted to scam investors out of millions of dollars between April 2020 and May 2023,
According to a lawsuit filed in Texas on Sept.18 by the Securities and Exchange Commission (SEC), the company's founder lied to potential investors on several accounts, from the scientific certification of the inhalers to the listing of the company's stock on the NASDAQ, reported Green Market Report's John Schroyer.
The complaint stipulates that Rapid Therapeutic Science Laboratories Inc. and its founder and CEO, Donal Schmidt Jr. are guilty of multiple violations of securities laws and carrying out fraudulent activities.
As part of the scheme, Schmidt and the Dallas-based company sold at least $2.1 million in unregistered securities to 51 investors in 15 states. Schmidt also sold $1.15 million in personal Rapid stock in late 2020.
In 2019, Schmidt masterminded a reverse merger maneuver by founding Rapid, a novel hemp CBD manufacturer, the lawsuit alleges.
Schmidt wasted no time in making bold claims about Rapid's legitimacy. Within only a few months of its founding, he trotted out an illegal certificate from the non-existent Cannabinoid MDI Certification Board (CMDICB) in a press release. As stated by the SEC, this organization was a mere fabrication by one of Schmidt's business associates.
He also lied about listing the company's shares on NASDAQ and obtaining ISO certification for a lab under the company's ownership, among other things.
Schmidt said that he "must have had a 'brain fart' when he drafted" the press release related to ISO certification, SEC said in the lawsuit.
In 2021, the company even strengthened its board of directors by appointing two new members.
Listed under the ticker symbol RTSL, Rapid Therapeutic Science Laboratories Inc. stock trades on the over-the-counter markets.
Cannabis Scandals Are Piling Up
This news comes on the heels of yet another cannabis bribery scandal.
On Monday, federal charges led to the arrest of a former local councilman in California, who along with a business associate, paid $70,000 in bribes, which were allegedly given to a member of the Baldwin Park City Council to secure their support and votes for commercial cannabis permits.
Interested in learning more about ongoing legal spats in the marijuana industry? Come joins us at the upcoming Benzinga cannabis event in Chicago that will feature a slew of cannabis experts, entrepreneurs and executives.