For years, Rolf Hirschmann and his partner solicited money from investors to develop cannabis cultivation and dispensary sites in Las Vegas and Adelanto, California. The pair raised more than $60 million since 2019 for their startup called WeedGenics, which they guaranteed would produce up to 36% returns.
But the business didn’t actually exist.
WeedGenics never owned any physical locations, nor did it grow any cannabis, according to a lawsuit filed by the U.S. Securities and Exchange Commission. Hirschmann lied about obtaining permits and generating revenue, and instead used investor funds for personal gain.
“It was all a sham,” the SEC said in a news release.
Hirschmann, a 52-year-old Eagle resident, was the face of the company, but he used the fake name Max Bergmann to avoid detection. His partner, Patrick Earl Williams, a rapper from Southern California known as “BigRigBaby,” worked behind the scenes and spent investor funds on his music career.
The legal complaint alleges that Hirschmann and Williams “dizzyingly” transferred money from about 350 nationwide investors through multiple accounts to buy jewelry, luxury cars, residential real estate and adult entertainment, instead of expanding its purported cannabis cultivation facilities.
They also spent about $16 million of the funds on Ponzi-like payments to other investors. A Ponzi scheme involves promising investors big returns, taking their money and then using that money to pay back earlier investors on their promised returns.
“While defendants offered up financials, locations and even photographs of purported facilities, none of them ever belonged to or was associated with defendants,” the legal complaint said.
The SEC sought a temporary restraining order and preliminary injunction to prevent Hirschmann and Williams from making any more purchases or accepting any funds. It also asked the court to require the two to “disgorge their ill-gotten gains,” along with interest.
The lawsuit was filed May 16 in the U.S. District Court of Central California.
What happened
According to the lawsuit:
While Hirschmann and Williams advertised their company as WeedGenics, its legal name was Integrated National Resources, or INR for short.
Prospective investors would reach out to INR through its website and investment forums. Hirschmann would become their primary contact. He would email them and talk with them on the phone. He held some in-person conversations, though he never revealed his actual name in those interactions.
He provided investors with pro forma financial spreadsheets that detailed revenues and expenses for the business’s operations. He told them WeedGenics was expanding and sent updates, including one that said, “harvesting the first crop this month.”
On its Twitter page, WeedGenics would share industry news and market its products. Its last post was on May 20, three days before the SEC announced it had shut down the company.
In late 2022, the business underwent a restructuring and changed the terms of its investor agreements.
Instead of sending investors monthly fixed interest payments on principal investments, as it promised, INR allegedly told investors to choose between a gradual return of only principal, or a conversion to fictitious “preferred stock” in the company.
INR said the restructuring was necessary because it was in the early stages of going public. But the move alienated investors.
Where did the money go?
Hirschmann and Williams spent much of the more than $60 million they allegedly swindled from investors on things unrelated to their supposed cannabis business. Here’s some of those transactions, as reported by the SEC:
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$625,000 on dining, jewelry and adult entertainment
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$1,617,000 in Ponzi-like payments to investors
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$116,000 for limousine services
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$5,482,000 on residential real estate and renovations
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$3,810,000 on luxury automobiles
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$4,449,000 in credit card payments
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$55,000 for motorcycles
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$1,779,000 in Ponzi-like payments to investors
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$660,000 in transfers to Hirschmann
U.S. District Judge John Holcomb granted the SEC’s request for a temporary restraining order against INR, Hirschmann, Williams and several other defendants. Holcomb also ordered their assets frozen and appointed a temporary receiver.
The SEC and defendants agreed to an extension of the temporary restraining order in June and again in July. The deadline for the permanent receiver to file a list of creditors was extended to Sept. 1. Since the lawsuit was filed, several attorneys for the defendants have withdrawn from the case.
One defendant called the SEC’s asset freeze “overly broad” in a July 24 filing. The defendant said it has a frozen bank account that contains funds unrelated to the case or the principal defendants — Hirschmann, Williams and INR.
A trial date has not been set. Efforts to reach Hirschmann by phone and email were unsuccessful.
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