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Michigan man accused of securities violations with crowdfunding

Hubbard Snitchler & Parzianello

In Michigan and across the nation, investment opportunities in new industries are coming up with stunning regularity. Whether it is an innovation like bitcoin, a business that is still in its infancy like legal marijuana or new ventures that could help with advancement in medicine, computers and other areas, people should be cognizant of the chance that they are being taken advantage of. If someone who is in the financial industry or claims to be a finance professional commits wrongdoing, it is important to understand the available steps to try and recover some or all the money that was lost.

SEC arrests three crowdfunding promoters for fraud

Three people, including one from Michigan, were arrested after an investigation was conducted by the Securities and Exchange Commission. According to the SEC, the men were promoting a cannabis real estate opportunity and received almost $2 million from crowdfunding investors. The Michigan man has a criminal history in which he had served 18 months’ probation due to illegal collection of fees from a separate company. That was undisclosed to investors. He and his associates had two unregistered offerings.

More than 50% of the funds they accrued were used for personal purchases and did not go toward the stated goal of buying real estate and then leasing it to those trying to grow cannabis. Another entity and the chief executive officer are also facing accusations that they were aware that the opportunity was likely fraudulent, but they did nothing to stop it. The crowdfunding scheme started while the Michigan man remained on probation. Around $1 million was accrued in the six months from September 2018 to May 2019. The remainder was raised in the next 13 months. It was not in any way used for its stated purpose. No investor has profited and few have recovered what they invested.

Recovering money lost in fraudulent investments might require legal advice

Securities litigation can be confusing. Even after the SEC has gotten involved in a case, those who were victimized by allegedly unscrupulous business people who are offering investment opportunities that turn out to be fraudulent might not know where to turn. The financial industry is complex and taking the necessary steps to try and recover what was lost can be difficult. In this case, now that the ringleaders have been arrested, victims should know how they can try and recover what they have lost. Those who find themselves in a similar situation or are suspicious about a possible fraud in progress should consult with experienced professionals on how to proceed.

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