Vitaly Fargesen

U.S. SECURITIES AND EXCHANGE COMMISSION

Litigation Release No. 26128 / September 25, 2024

SEC v. CanaFarma Hemp Products Corp., et al., 21-cv-8211 (S.D.N.Y. filed Oct. 5, 2021, amended complaint filed Nov. 28, 2023)

SEC Obtains Final Judgment Against Defendant for Role in Hemp Company Offering Fraud

On September 20, 2024, the U.S. District Court for the Southern District of New York entered a final judgment against Vitaly Fargesen, enjoining him from violating certain provisions of the federal securities laws and imposing a penny stock bar.  Previously in this action, Fargesen was enjoined from future violations of the charged provisions and barred from serving as an officer or director of a publicly-traded company. 

According to the SEC’s amended complaint, filed November 28, 2023, in 2019 and 2020 CanaFarma Hemp Products Corp. (“CanaFarma”) raised millions of dollars from investors.  While raising these funds purportedly to operate CanaFarma, Fargesen allegedly made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its own farm when in fact it had not processed any of this hemp and its products used hemp supplied by third parties.  The amended complaint further alleges that Fargesen directed changes to CanaFarma’s financial model in order to disguise an expected series of payments to himself.  Additionally, the amended complaint alleges that Fargesen misappropriated investor funds.

The SEC’s complaint charged Fargesen with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.  On August 14, 2024, the Court entered a partial consent judgment against Fargesen in which he agreed to be permanently enjoined from violations of the charged provisions and agreed to an officer-and-director bar.  On September 20, 2024, the Court entered a final consent judgment against Fargesen in which he agreed to pay disgorgement of $828,287 and prejudgment interest of $144,542.81, the payment of which was deemed satisfied by the amended restitution order in the parallel criminal proceeding, United States v. Fargesen, 21 cr. 602 (S.D.N.Y.).  Fargesen also agreed to be barred from participating in an offering of penny stock. 

The SEC’s litigation is being conducted by John C. Lehmann, Rusty Feldman, and Lindsay S. Moilanen and supervised by Daniel Loss and Thomas P. Smith, Jr. of the New York Regional Office.  The SEC appreciates the assistance of the United States Attorney’s Office for the Southern District of New York.