MANATEE -- An Arizona company called Cannabis-Rx that bought property in Manatee County this year with hopes for a licensed marijuana facility is at the center of a stock scheme and federal indictment.
The FBI announced Tuesday six people were indicted by a federal grand jury in a $500 million offshore asset protection, securities fraud and money laundering scheme. Cannabis-Rx was created as a shell company, according to the FBI.
The FBI has charged individuals Robert Bandfield, 70; Andrew Godfrey, 51; Kevin Leach, 34; Rohn Knowels, 29; Brian De Wit, 45; and Cem Can aka Jim Can, 44, as well as corporate defendants IPC Management Services LLC; IPC Corporate Services Inc.; IPC Corporate Services LLC; Titan International Securities Inc; Legacy Global Markets S.S.; and Unicorn International Securities LLC.
They are charged with conspiracy to commit securities fraud, tax fraud and money laundering.
Banfield is a U.S. citizen and the government will seek extradition for all other defendants, who hail from Belize, the Bahamas and Canada.
The FBI said the defendants involved created shell companies in Belize and Nevis, West Indies, for their clients and placed shadow leaders at the top of the company to conceal the clients's stock ownership of a U.S. public company.
"As alleged, Bandfield and his co-conspirators devised not only a fraudulent scheme but an elaborate corporate structure based on lies and deceit
designed to enable U.S. citizens to evade and circumvent our securities and tax laws. They set up sham companies with figureheads at the helm in an attempt to deceive U.S. law enforcement and regulators and bragged about their scheme to their clients," United States Attorney Loretta E. Lynch said in a news release.
The indictment covers a $500 million scheme of creating an offshore safe haven, Lynch said. The scheme had these people create tax shelters and money laundering through the creation of shell companies to get rich, according to the FBI. More than 100 U.S. citizens and residents were part of what the FBI called "corrupt clients."
One of those companies created was Cannabis-RX, a penny stock traded under the symbol CANA, which the FBI said was involved in what's called a pump-and-dump scheme where the stock was artificially inflated. The nominee's name for the head of Cannabis-Rx was also set up for trading through Belize brokerage firms, according to the FBI.
Manatee County property
Cannabis-Rx bought three former buildings on 9.26 acres at 7150 15th St. E. on Jan. 26 once owned by boat manufacturers Genmar and Wellcraft. That $1.26 million transaction was paid by another company, Praetorian Capital, a wholly owned subsidiary. Praetorian was registered to another company that shared an address with Cannabis-Rx, Longview Real Estate Inc., according to Florida business filings.
The chief executive officer of the company, Llorn Kylo, a Canadian citizen, told the Bradenton Herald in April they would consider putting a licensed operating marijuana operation there but ideally had plans to hold on to the property, improve it and then sell it later this year.
The transactions involved for Cannabis-Rx took place between March 27 and April 16, according to the FBI, and on March 28, De Wit received at least five phone calls from the client to fraudulently trade the stock.
That was the first time the CANA stock was traded since July 2, 2013, according to the FBI when it had 189,800 shares. The stock fell from $13.77 per share on March 27 to 50 cents per share April 16, according to the FBI.
"As alleged, the defendants concocted an intricate scheme using sham companies to make money while repeatedly evading and violating U.S. securities and tax laws. The indictment of these defendants should serve as a stern reminder that such greed-based behavior comes at a cost. The FBI will continue to use its investigative expertise in working with law enforcement partners to identify, disrupt, and dismantle sophisticated fraud schemes to ensure the integrity and transparency of our financial markets," said FBI Assistant Director-in-Charge George Venizelos.
Countering new law
One of the other schemes to avoid reporting to the IRS included having a client receive an IRS form for reporting proceeds signed by Godfrey as the nominee for the shell company. Bandfield told an undercover agent he created this "slick" corporate structure to counter a new law under President Barack Obama, the Foreign Account Tax Compliance Act, according to the FBI.
"The investigation of offshore tax evasion and money laundering are top priorities for IRS-Criminal Investigation, and we are committed to using all of our enforcement tools to stop this abuse. The enactment of the Foreign Account Tax Compliance Act is yet another example of how it is becoming more and more risky for U.S. taxpayers to hide their money globally. Moreover, this partnership of IRS-CI, the FBI, HSI, and the U.S. Attorney's Office demonstrates the government's resolve to combat international crime," said IRS Criminal Investigations Acting Special Agent-in-Charge Shantelle Kitchen.
Charles Schelle, Herald business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.