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Fraud at the Center of Lawsuits Against California Cannabis Company, Executive for Allegedly Inflating Financial Projections to Lure $1.2 Million in Loans
Deceptive Tactics Unmasked in Three Lawsuits Against Pot Entrepreneur Case Mandel
LAS VEGAS – A prominent Florida law firm has filed a trio of lawsuits against a high-profile California marijuana company, alleging a scheme to defraud $1.2 million in still-unrepaid loans and shining a light on the dark side of the burgeoning legal marijuana industry. The litigation may have some caveat emptor value for those looking to enter Florida’s developing cannabis businesses. Lenders allege that the California-based marijuana company and its key executive used “make-believe projections” – inflated by 2,000% – to intentionally deceive them about the company’s true financial picture and then pocketed the money with no intention of ever repaying the debt.
A federal lawsuit filed this week in Nevada and lawsuits recently filed in Nevada and California state courts reveal the depths that some seemingly respectable operators will go to deceive supposed partners, investors, and lenders in order to enrich themselves. The litigation targets purported cannabis entrepreneur Case Mandel and businesses he operated under the name Cannadips, accusing Mandel of obtaining $1.2 million through fraud, misrepresentation, breach of contract, and unjust enrichment. The plaintiffs – Nevada-based Solace Holdings LLLP and Aether Gardens, and Telloni Holdings Limited, formed in the British Virgin Islands and located in London – say Mandel induced them to loan him more than $1.2 million to fund his cannabidiol (CBD) business by inflating business numbers by over 2,000%.
Mandel, who has reached nouveau-celebrity status in some quarters of the legal marijuana trade through ongoing promotion of himself and Cannadips to industry journals, is portrayed in the lawsuits as the alleged mastermind of a deceptive scheme to illegally entice loans and investments with intentionallymisleading documents and tactics.
The lawsuits all have been filed for Florida-based legal counsel Perlman, Bajandas, Yevoli & Albright, P.L. and seek judicial action in state and federal courts for the alleged misdeeds.
“Mandel made a series of blatantly false representations, including through the use of make-believe projections, to lure in Solace and its affiliates into deals Mandel never intended to fulfill,” the federal complaint states. After committing to use some of the borrowed funds for marketing, the lawsuit alleges, he “instead used the money to fund Mandel’s lifestyle. After nearly two years, Solace never received what it bargained for as a result of Defendants’ failure to carry out their contractually required marketing activities.”
The state court lawsuits say Mandel was “on a desperate pursuit to raise money at all costs” when he initiated his fraud in July 2018. First Mandel borrowed $500,000, and then increased the debt to $1 million in 2019. Then, claiming he needed more money for marketing so he could generate enough revenue to pay back the large loan, Mandel borrowed another $200,000. He has not paid back any of the borrowed funds, the lawsuits allege.
Industry expert Christian Bax, who served as the State of Florida's first Director of the Office of Medical Marijuana Use, issued a warning to legitimate businesspeople to beware of shady operators in the quickly evolving legal marijuana industry.
"The hemp and CBD markets are booming right now, but they are still fairly new. Despite the progress we've seen, the industry is still being undercut by spurious businesspeople looking to take advantage of investors looking to invest in cannabis,” said Bax, president of Bax and Associates. “There are so many entrepreneurs doing the right thing in hemp and CBD, but, unfortunately, investors these days have to be vigilant against misrepresentation, or worse, outright fraud."
The first in the series of lawsuits was filed in the district court of Clark County, Nevada, against Mandel and Trinidad Consulting, LLC, which he owns. The second case was filed in Humboldt County, California, against Mandel, Trinidad Consulting, and Trinidad Management, LLC, doing business as Cannadips. The federal lawsuit was filed in the U.S. District Court for Nevada, targeting the same defendants as the California lawsuit.
View the full lawsuit in PDF format here.
Phillip A. Silvestri, Esq.
Nevada Bar No. 11276
Greenspoon Marder LLP
3993 Howard Hughes Pkwy., Ste. 400
Las Vegas, Nevada 89169
Tel: (702) 978-4249
Fax: (954) 333-4256
phillip.silvestri@gmlaw.com
Paul D. Turner, Esq. (Florida Bar No. 121690)
Pro Hac Vice Application to be Submitted
Benjamin L. Reiss, Esq. (Florida Bar No. 121690)
Pro Hac Vice Application to be Submitted
Nima Tahmassebi, Esq. (Florida Bar No. 121690)
Pro Hac Vice Application to be Submitted
PERLMAN, BAJANDAS, YEVOLI & ALBRIGHT, PL
200 South Andrews Avenue, Suite 600
Fort Lauderdale, Florida 33301
T: 954-566-7117 / F: 954-566-7115
pturner@pbyalaw.com
breiss@pbyalaw.com
ntahmassebi@pbyalaw.com
Attorneys for Plaintiff
