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Not a great week for former cannabis executives

CannTrust’s former CEO Peter Aceto and two former directors, Eric Paul and Mark Litwin, are facing a long list of charges under the Securities Act including fraud and insider trading after a joint investigation by the Ontario Securities Commission (OSC) and the RCMP.

“In cases involving serious market misconduct, prosecution in provincial court allows us to seek a range of strong sanctions, including jail time,” said OSC director of enforcement Jeff Kehoe in a statement.

The background

It all started back in 2019, when a whistleblower reported that a significant amount of cannabis cultivated at one of CannTrust’s facility was done in unlicensed grow rooms. The OSC alleges that a number of press releases and communications with shareholders indicated otherwise: that it was all Health Canada approved. While the company lost its licences in the aftermath, they have since been reinstated.

The response

Lawyers for all three former execs responded to the charges, denying any wrongdoing on behalf of their clients. All three will appear in a Toronto courtroom on July 26.

Will former California cannabis CEO get off Eaze-y?

In another cannabis fraud case, the former CEO of California delivery company Eaze pleaded guilty to one count of conspiracy to commit bank fraud, reports Marijuana Business Daily. James Patterson was accused of making more than $100 million worth of cannabis transactions appear as other products to trick banks into processing them.

According to Law360, the guilty plea could indicate Patterson is seeking a more lenient sentence than his former colleagues, Ruben Weigand and Hamid Akhavan, whose New York federal court proceedings will start in March. 

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