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Two New Jersey Men Arrested and Charged with Securities Fraud
Grimy Times has learned that Vitaly Fargesen, 52, and Igor Palatnik, 47, both of New Jersey, have been arrested and charged with securities fraud in connection with their scheme to defraud investors in CanaFarma Corp. and later CanaFarma Hemp Products Corp.
The indictment alleges that Fargesen and Palatnik, who held themselves out as Senior Vice Presidents at CanaFarma, 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.
According to the allegations, Fargesen and Palatnik failed to invest investor’s funds as promised, caused the manipulation of the public stock price of CanaFarma for the purposes of advancing the scheme to defraud investors and enriching themselves, and secretly misappropriated at least $4 million of CanaFarma funds for their own benefit.
The indictment also alleges that 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 to exercise secret control of the resulting publicly traded company, and controlling CanaFarma through a nominal Chief Executive Officer who reported to Fargesen and Palatnik.
The case is assigned to U.S. District Judge Loretta A. Preska. If convicted, Fargesen and Palatnik each face a maximum sentence of five years in prison for conspiracy to commit securities fraud, 20 years in prison for securities fraud, and an unspecified sentence for conspiracy to commit wire fraud.
The investigation was conducted by the FBI’s New York Office, and the case is being prosecuted by the U.S. Attorney’s Office for the Southern District of New York.
Manhattan U.S. Attorney Audrey Strauss said, ‘Vitaly Fargesen and Igor Palatnik presented themselves as entrepreneurs developing a new business for an emerging industry. But, as alleged, Fargesen and Palatnik were just using the trappings of a start-up to run an old-time scam: lying to investors to take money for themselves.’
F.B.I. Assistant Director-in-Charge Michael J. Driscoll said, ‘The defendants, as alleged, lured investors to CanaFarma by falsely representing the company’s financials, manipulating their stock price, and misappropriating millions for their personal benefit. Just as a reminder to anyone who thinks they can manipulate people’s investments in this way—that’s simply not the case.’
Key Facts
- State: New York
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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