ECONOMY & WORK
MONEY 101
NEWS
PERSONAL FINANCE
NET WORTH
About Us Contact Us Privacy Policy Terms of Use DMCA Opt-out of personalized ads
© Copyright 2023 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
MARKETREALIST.COM / NEWS

What Is The CanaFarma Fraud?

Co-founders of CanaFarma Vitaly Fargesen and Igor Palatnik are expected to be sentenced in January.
PUBLISHED DEC 19, 2023
Representative image | Getty Images | Photo by Drew Angerer
Representative image | Getty Images | Photo by Drew Angerer

Two former executives of CanaFarma Hemp Products Corp. have been implicated in a consent judgment by the U.S. Securities and Exchange Commission in a $15 million fraud case. The duo were initially charged for misappropriating at least $4 million in investor funds in 2021.



 

The new development builds on the charges filed in 2021 by the SEC alleging that the Canadian start-up’s senior vice presidents of sales and marketing, Frank V. Barone and Kirill Chumenko, along with co-founders Vitaly Fargesen and Igor Palatnik, engaged in a fraud spanning over 2 years to make personal gains.

As per the SEC’s complaint, the executives of the Canadian startup, CanaFarma which is a hemp company with offices in Vancouver and New York City, engaged in a sophisticated fraud to obtain money from investors. Its co-founders Vitaly Fargesen and Igor Palatnik raised millions of dollars by making misrepresentations to investors, including claims that CanaFarma was a fully integrated company, as per the SEC release.

They also claimed that their company processed hemp from its farm. However, the company never processed any of its hemp, and its products used hemp supplied by third parties.

The complaint further alleges that the executives misstated historical revenue numbers and included baseless projections about future revenues, to mislead investors.



 

Further, Fargesen and Palatnik were accused of misappropriating at least $4 million and using the funds for their personal use and purposes unrelated to CanaFarma. The SEC’s amended complaint further alleges that it was Fargesen and Palatnik who misled the investors that Barone and Chumenko, at the direction of Fargesen, made unsupported changes to CanaFarma’s finances to disguise the illicit payments made to Fargesen and Palatnik. The two are accused of using the fund for personal use or purposes unrelated to CanaFarma.

“Investors paid as much as $0.50 for each share of CanaFarma stock they bought through defendants’ securities offerings. Today, those shares are worth a fraction of what these investors paid,” the complaint stated.

Previously, Vitaly Fargesen, and Igor Palatnik, had each pleaded guilty to one count of conspiring to commit wire fraud and one count of conspiring to commit securities fraud.

In addition to the previously announced charges against CanaFarma, Fargesen, and Palatnik, the amended complaint now charges Barone and Chumenko with violations of Sections 17(a)(1) and (3) of the Securities Act of 1933 (“Securities Act”) along with the Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”).

The U.S. Securities and Exchange Commission seal | Getty Images | Photo by Chip Somodevilla
The U.S. Securities and Exchange Commission seal | Getty Images | Photo by Chip Somodevilla

Since it is a consent judgment, it means that the defendants had agreed to the judgment without admitting or denying the allegations. Both the old and the new combined charges carry a maximum sentence of 10 years in prison. Both Fargesen and Palatnik are expected to be sentenced in January.

Meanwhile, Barone and Chumenko have been barred from serving as an officer or directors of a public company and from participating in penny stock offerings. They have also been ordered to pay, disgorgement, civil penalties, and prejudgment interest.

MORE ON MARKET REALIST
Some users also told her to just sell the car back and take cash for it instead of just paying taxes.
4 hours ago
The man was initially convinced that there was a gold nugget inside the rock but he just couldn't crack it.
5 hours ago
The question may not have been suggestive but fans read between the lines and interpreted it their way.
7 hours ago
Sajak acknowledged that his farewell was robbing the players of time and winning opportunities.
8 hours ago
The user finally decided to spend what he found on a camera and still had $500 left.
10 hours ago
The guest made it clear that he intended to hold on to the precious instrument for life.
1 day ago
The priest could've won the game if he hadn't failed to guess answers based on Bible clues.
2 days ago
The guest's children called it ugly but she held on to it as it made her feel at peace.
3 days ago
The contestant decided to do something different for the third slot and that backfired.
3 days ago
Charli and her sister were called out for being out of touch with the everyday reality of workers.
3 days ago
Former Amazon workers also commented giving further clarity about the meaning of the label.
4 days ago
The cards were placed on a board with notes handwritten by some of the players in them.
4 days ago
The country star also shared advice with the kids about investing the money and saving some of it.
4 days ago
In the years after the rejection of "Shark Tank," the firm grabbed the attention of big players such as Richard Branson.
4 days ago
His uncle had bought it for $10 in London while serving as a soldier in World War II.
4 days ago
The host Jennings and the winner of the game both quickly apologized for the problematic mistake.
5 days ago
Sharks have also endured some of the worst pitches in America while making profits from several investments.
5 days ago
Costco's generous return policy has resulted in numerous bizarre stories shared online.
5 days ago
The boy first thought of it when he was just 8 years old and started working on it with his father.
6 days ago
The TikTok campaign helped the user collect a lot more than he intended to through a fundraiser.
6 days ago