Feds seek big payments from men accused of Las Vegas marijuana Ponzi scheme
Two men accused of running an alleged marijuana investment scam tied to Las Vegas face steep financial hits from federal regulators.
The Securities and Exchange Commission filed court papers seeking a judgment that WeedGenics pitchman Rolf Max Hirschmann is liable for disgorgement — the turnover of profits from an alleged scheme — totaling roughly $20.5 million, as well as $7.5 million in prejudgment interest and a $10.8 million civil penalty.
The financial regulator also wants a court order against WeedGenics executive Patrick Earl Williams for disgorgement of nearly $7 million, plus roughly $2.6 million in prejudgment interest and a nearly $7 million civil penalty.
U.S. District Judge John Holcomb is scheduled to consider the requests Friday in federal court in Santa Ana, California, court records show.
Overall, the SEC’s actions point to the conclusion of a civil case centered on allegations of brazen fraud and lavish spending.
Hirschmann, whose attorneys recently moved to withdraw from the case, citing unpaid legal bills from their client, did not respond to a request for comment.
Williams did not respond to requests for comment either. The court docket does not show legal counsel for him in the case, and according to the SEC, he did not respond to the agency’s actions.
‘BigRigBaby’
The SEC sued WeedGenics in 2023, alleging the company raised nearly $62 million from hundreds of investors but ran a Ponzi-like scheme. The agency filed its complaint against Hirschmann, Williams and WeedGenics’ corporate entity Integrated National Resources Inc. in federal court in California.
According to the SEC, the company lied about having cannabis facilities and used funds to pay other investors or for personal use, including jewelry, cash withdrawals and luxury cars such as Ferraris, Lamborghinis and BMWs.
Hirschmann was the company’s investor relations representative, and Williams was chairman and president of WeedGenics’ corporate entity, the SEC said.
According to the agency, Hirschmann used a fake name, Max Bergmann, when dealing with investors, and Williams, a rapper known as “BigRigBaby,” spent investor funds on his music career.
WeedGenics told prospective investors that its cannabis cultivation facility in Las Vegas generated $18 million in annual revenue and that a new facility in California would boost its yearly revenue to $54 million, according to the SEC.
It also indicated it had the required licenses and permits for its facilities, but “all of this was a sham,” the agency alleged.
WeedGenics previously listed its mailing address as being in the Hughes Center office park just east of the Las Vegas Strip and claimed its products could be found at several Las Vegas-area dispensaries.
But one of those retailers told the Las Vegas Review-Journal that it never heard of WeedGenics.
Unpaid legal bills
Court-appointed receiver Krista Freitag has issued more than 240 subpoenas and recovered more than $8 million in cash, 14 vehicles, six real estate properties and various jewelry and artwork, court records show.
Last fall, Judge Holcomb approved her sale of Hirschmann’s northwest Las Vegas Valley house for about $1.1 million to new owners.
Hirschmann’s legal team with Nixon Peabody LLP filed a motion in February to withdraw from the case, saying its client “failed to timely pay outstanding invoices due in this matter.”
The attorneys noted that despite this, they had stayed on as counsel and negotiated a settlement with the SEC. They did not respond to a request for comment.
“This case is nearing its end,” the lawyers wrote in their motion, adding the main outstanding task centered on any penalties against the defendants.
Given that their client had “not paid Nixon Peabody fees owed for previous work performed on their behalf for months, we have now reached the point where we must withdraw as counsel,” they stated.
The next day, the SEC filed court papers outlining the sums of money it’s seeking from Hirschmann and Williams.
Contact Eli Segall at esegall@reviewjournal.com or 702-383-0342.
