MANATEE -- The marijuana-friendly company named in a federal indictment this week said it is a victim in a $500 million pump-and- dump stock scheme and tax evasion.
Federal authorities, including the FBI, announced an indictment Tuesday of five individuals and several companies involved in an offshore tax-shelter scheme and artificial stock inflation. Within the announcement, authorities described how one defendant, Canadian resident Brian De Wit, manipulated the stock price.
The chief executive officer of Cannabis-Rx reached out to the Herald on Thursday to explain the company's involvement.
"We were shocked to learn of the indictment alleging that certain Cannabis-Rx shareholders participated in illegal activities to manipulate our stock," CEO Llorn Kylo said in a statement. "Cannabis-Rx, which is fully cooperating with authorities, and its law-abiding shareholders are victims of this alleged scheme. Despite this unfortunate development, our day-to-day operations are proceeding as usual and our team remains focused on executing our strategic growth initiatives."
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.
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.
The FBI charged Robert Bandfield, 70; Andrew Godfrey, 51; Kevin Leach, 34; Rohn Knowels, 29; Cem Can, 44 ; and De Witt for conspiracy to commit securities fraud, tax fraud and money laundering, in addition to several corporations.
An FBI spokesperson did not return calls seeking comment for this story.
Charles Schelle, Herald business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.