SEC Obtains Partial Asset Freeze of Proceeds in Alleged Fraudulent Touting Scheme
Litigation Release No. 24066 / March 8, 2018
Securities and Exchange Commission v. Jeffrey O. Friedland, Global Corporate Strategies LLC, and Intiva Pharma LLC, Defendants, and Lane 6552 LLC, Kathy B. Friedland, Aspen Upper Ranch LLC, Assurance Management, LLC, and The Jeffrey and Kathy Friedland Irrevocable Trust, Relief Defendants , Case. No. 1:18-cv-00529 (D. Colo. Filed March 5, 2018)
The Securities and Exchange Commission has filed fraud charges in a scheme to inflate the share price of an Israeli medical marijuana company's common stock. The court today entered a partial asset freeze of the proceeds of the alleged fraud.
The SEC's complaint, which was filed on March 5 in federal district court in Denver, alleges that Colorado resident Jeffrey O. Friedland touted OWC Pharmaceutical Research Corp. while misrepresenting both his own investment in OWC and the true nature of his professional relationship with the company. As alleged in the Complaint, Friedland was compensated with more than five million OWC shares for handling the company's media and investor relations efforts. Friedland then touted OWC to media, industry, and investors, creating the false impression that he was merely an early investor in OWC and later, a member of its advisory board, without disclosing his role as a paid promoter. Friedland is alleged to have sold his OWC shares for almost $7 million, after which he and his spouse placed a portion of the proceeds in an investment account in the name of Lane 6552, acquired two homes in all-cash purchases, and made other purchases and uses of the funds. Friedland's sales took place from March through September 2017 and were made through accounts in the names of Lane 6552 LLC and Intiva Pharma LLC. The United States District Court today, among other things, froze certain accounts that received proceeds of Lane 6552's sales of OWC stock.
The SEC's Complaint charges Friedland, Global Corporate Strategies LLC, and Intiva Pharma LLC with violations of Sections 17(a) and (b) of the Securities Act of 1933 and Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC is seeking injunctions, disgorgement, prejudgment interest, penalties and penny stock bars. The complaint also named Kathy B. Friedland, Lane 6552 LLC, Aspen Upper Ranch LLC, Assurance Management, LLC, and the Jeffrey and Kathy Friedland Irrevocable Trust as relief defendants.
The investigation has been conducted by Michael T. Grimes, Keith O'Donnell, William Connolly, Shipra G. Wells, and Josh Felker, and supervised by Melissa R. Hodgman. Christian Schultz and Timothy Halloran will lead the SEC's litigation under the supervision of Fred Block. The SEC appreciates the assistance of Financial Industry Regulatory Authority (FINRA) The SEC's investigation is ongoing.