Integrated CBD (ICBD), a company based out of Arizona has been accused of defrauding investors for about US $350,000 in the beginning of this year.
The company received an emergency pandemic relief loan for 50 employees through the U.S Paycheck Protection Program (PPP). However, the company had laid off all of its employees months before and the amount was used by company owners to buy a private jet, the Canadian LTD CL – 600 Challenger and other luxury items. The lawsuit has named Patrick B. Horsman, Jeffrey M. Dreyer, and Ari M. Schiff ” acting individually, as well as conspiring together with one another with Defendant Horsman acting as mastermind and ringleader—planned and executed an elaborate scheme of fraud and material misrepresentations and omissions”.
Patrick Horsman has argued that he sought a loan through the U.S. Paycheck Protection Program (PPP) in an effort to rehire staff he had previously laid off. According to him, the company received US $218,089 which was initially challenged by ICBD investors. He mentioned that it was repaid back but Hemp Industry Daily was unable to confirm the repayment. Patrick Horsman has also mentioned that the plane was purchased using his personal fund and has the name and logo of Horsman’s investment firm, Horsman Holdings LLC.
In 2019, ICBD presented to the investors that ICBD would grow industrial organic hemp and extract CBD to sell to large industrial and multinational brands in the pharma and consumer space,” creating a multi-million dollar company, the lawsuit said. Although the company had claimed to have more than 10,000 acres of certified organic farmland in Arizona, the lawsuit maintains that only 8245 acres were available and the farmland was not farmable because of low soil salinity and bad wells. Then in January of 2020, investors were told that “the business had crumbled and would need more money if it was to continue.” It was around this time that investors demanded to review the bank statements. The lawsuit alleges that ICBD’S money to pay off personal credit cards and debts. Attorneys have maintained that Horsman lied to the investors that ICBD had raised $50 million ‘in senior secured debt’ from a hedge fund $70 million total in debt and equity capital. The lawsuit read that it was a calculated move to strengthen the company’s outward appearance and prospects as well as to hide its operational and financial defects.
The lawsuit also alleges that the defendants have used shell companies to transfer amounts. For example, an entity of this sought was used to lease the 8524 acres of farmland for $4.8 million. According to a report by Law 360, companies within the cannabis industry have received $3.5 million to $8.7 million through the Small Business Administration’s Paycheck Protection Program in 2020. The Congress had red-flagged $4 billion as potentially fraudulent because the U.S government does not allow for the sale of marijuana.
Assistant Attorney General Brian Rabbitt said that agency would continue to probe for cases of PPP recipients buying “luxury items” instead of using the loans to keep employees on the job. “They were intended to help ordinary, everyday Americans pay their bills and put food on the table,” Rabbitt said.“I can assure you they were not intended to help support fraudsters’ dreams of owning Lamborghinis, Rolls Royces, Range Rovers or diamond jewelry.”