Two New Jersey men have been arrested and charged with securities fraud in a scheme to defraud investors in a hemp company.
Vitaly Fargesen, 52, and Igor Palatnik, 47, both of New Jersey, were arrested and charged with one count of conspiracy to commit securities fraud, one count of securities fraud, and one count of conspiracy to commit wire fraud. If convicted, they face up to 25 years in prison.
According to the indictment, Fargesen and Palatnik presented themselves as entrepreneurs developing a new business in the emerging hemp industry. However, as alleged, they used the trappings of a start-up to run an old-time scam: lying to investors to take money for themselves.
From March 2019 to March 2020, CanaFarma Corp. was a privately-held Delaware corporation with offices in Manhattan, New York. Beginning on March 19, 2020, CanaFarma was listed on the Canadian Stock Exchange, and beginning on March 23, 2020, CanaFarma was listed on the Frankfurt Stock Exchange.
Fargesen and Palatnik, who held themselves out as Senior Vice Presidents at CanaFarma, in fact exercised full control of the company. They hid their control from the investing public by convincing an experienced businessman to falsely present himself to the market as the CEO of the company.
Using their control of CanaFarma, Fargesen and Palatnik devised and carried out a scheme to defraud CanaFarma’s investors by soliciting more than $14 million in funds with false and misleading representations concerning the company’s management, products, and financials.
The scheme also involved secretly misappropriating at least $4 million of CanaFarma funds for their own benefit. Fargesen and Palatnik effectuated the scheme by purchasing a Canadian shell company through a straw purchaser, directing the reverse merger of the shell company and CanaFarma, and supporting CanaFarma’s stock price through manipulative trading.
Related Federal Cases
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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