Why Do You Think They Call It Dope? SEC Charges Medbox With Running Marijuana Scam

From Fortune:

The SEC Says This Marijuana Vending Machine Penny Stock Made Up Bogus Revenue

The revenue touted by marijuana vending machine company Medbox was about as substantial as smoke, the Securities and Exchange Commission alleged late Thursday.

Instead of selling their $50,000 vending machines that were supposed to dispense marijuana on the basis of biometric identification, Medbox executives and consultants created phony press releases with false revenue figures, the SEC said. In fact nearly 90% of the company's revenue reported in the first quarter of 2014 was actually false, the SEC claims.

According to the SEC, then-Medbox consultant and inventor Vincent Mehdizadeh even acknowledged in a text message that “the only thing we are really good at is public company publicity and stock awareness. We get an A+ for creating revenue off sheer will but that won’t continue.”

And he was likely right about the company's ability to manage publicity. Bloomberg Businessweek profiled the California company back in 2013 at a time when Medbox, now renamed Notis Global, was already posting false revenue figures. That article noted that Medbox wanted to be "the Walmart of weed." Fortune also mentioned Medbox in a 2013 cover story, "Yes We Cannabis."...

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'Yes we cannabis?'
The audacity of dope.

Here's the SEC:

Litigation Release No. 23774 / March 9, 2017

Securities and Exchange Commission v. Notis Global, Inc. (f/k/a Medbox, Inc.), et al., Civil Action No. 2:17-cv-01905 (C.D. Cal. filed March 9, 2017)

SEC Charges Marijuana-Related Company and Executives With Touting Bogus Revenues

The Securities and Exchange Commission charged a California-based company and its founder with falsely touting "record" revenue numbers to investors and claiming to be a leader in the marijuana industry while some of its earnings came from sham transactions with a secret affiliate.

According to the SEC's complaint, Medbox provided marijuana consulting services and claimed to sell vending machines known as "Medbox" devices capable of dispensing marijuana on the basis of biometric identification. The SEC alleges that Vincent Mehdizadeh created a shell company called New-Age Investment Consulting to carry out illegal stock sales and used the proceeds from those sales to boost Medbox's revenue. Medbox allegedly issued press releases headlining the phony revenues as record earnings to legitimize itself as a viable commercial operation when in fact nearly 90 percent of the company's revenue in the first quarter of 2014 stemmed from sham transactions with New-Age. Mehdizadeh allegedly acknowledged in a text message that "the only thing we are really good at is public company publicity and stock awareness. We get an A+ for creating revenue off sheer will but that won't continue."

Meanwhile, according to the SEC's complaint, Mehdizadeh funded the purchase of a luxury home in the Pacific Palisades with proceeds from New-Age's illicit stock sales.

The SEC's complaint additionally charges Medbox's then-CEO Bruce Bedrick with being complicit in the scheme and personally profiting. The SEC also charged New-Age and Mehdizadeh's then-fiancée Yocelin Legaspi with unlawfully selling unregistered securities. Mehdizadeh installed Legaspi as the supposed CEO of New-Age when he created the company....MORE

'New-Age Investment Consulting'?
The audacity of dopes.