This case was last updated from PACER on 12/04/2021 at 09:20:17 (UTC).

Securities and Exchange Commission v. CanaFarma Hemp Products Corp. et al

Case Summary

On October 5, 2021, the Securities and Exchange Commission (“SEC”), represented by Richard R. Best and Lee Attix Greenwood, attorneys at the SEC’s New York regional office,  filed a civil enforcement action against CanaFarma Hemp Products Corp. (“CanaFarma” or the “Company”), Vitaly Fargesen (“Fargesen”) and Igor Palatnik (“Palatnik”) (collectively, “Defendants”), seeking injunctive relief, payment of civil monetary penalties and disgorgement of all ill-gotten gains along with prejudgement interest for the Defendant’s alleged investment offering fraud committed. This case was filed in U.S. District Court in the Southern District of New York with Judge Paul G. Gardephe presiding.

 

In the complaint the Plaintiff alleged that, “Defendants perpetrated an investment offering fraud through which they raised millions of dollars from investors for a start-up hemp company called CanaFarma on the basis of misrepresentations about how investor money would be used as well as misrepresentations about the Company’s business prospects. CanaFarma’s stated business plan was to grow hemp at farms in New York and to sell hemp-based products such as chewing gum that it would market directly to consumers. From March 2019 through at least October 2020 (the “Relevant Period”), Defendants raised approximately $15 million from more than 60 investors around the world, including investors in the United States and in this District.”

 

The Plaintiff further alleged that, “Though investors were told their money would be used to fund CanaFarma’s business operations, beginning in at least April 2019, Fargesen and Palatnik—“vice presidents” on paper but the controlling persons of the Company in reality—misappropriated at least $4 million of investor funds from these raises, either for personal use or for purposes unrelated to CanaFarma’s business. Defendants concealed this misappropriation from potential investors through the use of doctored financial projections backed up by phony agreements and invoices that were intended to make the payments appear as if they were for legitimate corporate expenses.”

 

The Plaintiff also alleged that, “Additionally, Defendants made or disseminated to investors numerous other material misrepresentations and omissions about the Company and its business prospects. Defendants provided financial information to investors that misstated historical revenue numbers and included baseless projections about future revenue that were unsupported by the Company’s own internal forecasts. And, Defendants touted the quality of CanaFarma’s management team, which was purportedly led by its CEO, Executive-1, while failing to state that, in reality, Executive-1 was CEO in name only, making no substantive decisions and taking direction from Fargesen and Palatnik. Investors paid as much as $0.50 for each share of CanaFarma stock they bought through Defendants’ securities offerings. Today, those shares are worth a fraction of what these investors paid.”

 

There are two claims for relief laid down by the Plaintiff. The first claim alleged is for violations of Securities Act Section 17(a) and the second claim alleged is for violations of the Exchange Act Section 10(b) and Rule 10b-5 Thereunder.

 

In its prayer for relief the Plaintiff has requested the Court to permanently enjoin Defendant CanaFarma from violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 promulgated thereunder; permanently enjoin Defendant Fargesen from violating Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 promulgated thereunder; order Defendants to disgorge all ill-gotten gains they received directly or indirectly, with prejudgment interest; and order Defendants to pay civil monetary penalties under Securities Act Section 20(d) and Exchange Act Section 21(d)(3).

 

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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:21-CV-08211

  • Filing Date:

    10/05/2021

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

Judge Details

Presiding Judge

Paul G. Gardephe

 

Party Details

Plaintiff

Securities and Exchange Commission

New York, NY 10281-1022

Defendants

CanaFarma Hemp Products Corp.

Vitaly Fargesen

Igor Palatnik

Attorney/Law Firm Details

Plaintiff Attorneys

Richard R. Best

Attorney at U.S. Securities and Exchange Commission

200 Vesey Street, Ste 400

New York, NY 10281

Lee Attix Greenwood

Attorney at United States Securities and Exchange Commission

200 Vesey Street, Suite 400

New York, NY 10281

 

Court Documents

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#11

(#11) SUMMONS RETURNED EXECUTED. Vitaly Fargesen served on 10/22/2021, answer due 11/12/2021. Service was accepted by Vitaly Fargesen. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/26/2021)

#12

(#12) SUMMONS RETURNED EXECUTED. Igor Palatnik served on 10/22/2021, answer due 11/12/2021. Service was accepted by Irina Palatnik. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/26/2021)

#13

(#13) SUMMONS RETURNED EXECUTED. CanaFarma Hemp Products Corp. served on 11/2/2021, answer due 11/23/2021. Service was accepted by Sheona Docksteader, Authorized Representative. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 11/05/2021)

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Docket Entries

  • 11/05/2021
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  • Docket(#13) SUMMONS RETURNED EXECUTED. CanaFarma Hemp Products Corp. served on 11/2/2021, answer due 11/23/2021. Service was accepted by Sheona Docksteader, Authorized Representative. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 11/05/2021)

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  • 10/26/2021
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  • Docket(#12) SUMMONS RETURNED EXECUTED. Igor Palatnik served on 10/22/2021, answer due 11/12/2021. Service was accepted by Irina Palatnik. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/26/2021)

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  • 10/26/2021
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  • Docket(#11) SUMMONS RETURNED EXECUTED. Vitaly Fargesen served on 10/22/2021, answer due 11/12/2021. Service was accepted by Vitaly Fargesen. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/26/2021)

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  • 10/08/2021
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  • Docket(#10) NOTICE OF PRETRIAL CONFERENCE: Initial Conference set for 1/6/2022 at 10:45 AM before Judge Paul G. Gardephe by telephone. The parties are directed to dial 888-363-4749 to participate, and to enter the access code 6212642. SO ORDERED. (Signed by Judge Paul G. Gardephe on 10/8/2021) (ks) (Entered: 10/08/2021)

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  • 10/06/2021
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  • Docket(#9) ELECTRONIC SUMMONS ISSUED as to Vitaly Fargesen..(jgo) (Entered: 10/06/2021)

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  • 10/06/2021
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  • Docket(#8) ELECTRONIC SUMMONS ISSUED as to Igor Palatnik..(jgo) (Entered: 10/06/2021)

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  • 10/06/2021
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  • Docket(#7) ELECTRONIC SUMMONS ISSUED as to CanaFarma Hemp Products Corp...(jgo) (Entered: 10/06/2021)

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  • 10/06/2021
  • DocketCase Designated ECF. (jgo) (Entered: 10/06/2021)

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  • 10/06/2021
  • DocketMagistrate Judge James L. Cott is so designated. Pursuant to 28 U.S.C. Section 636(c) and Fed. R. Civ. P. 73(b)(1) parties are notified that they may consent to proceed before a United States Magistrate Judge. Parties who wish to consent may access the necessary form at the following link: #https://nysd.uscourts.gov/sites/default/files/2018-06/AO-3.pdf. (jgo) (Entered: 10/06/2021)

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  • 10/06/2021
  • DocketCASE OPENING INITIAL ASSIGNMENT NOTICE: The above-entitled action is assigned to Judge Paul G. Gardephe. Please download and review the Individual Practices of the assigned District Judge, located at #https://nysd.uscourts.gov/judges/district-judges. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such. Please download and review the ECF Rules and Instructions, located at #https://nysd.uscourts.gov/rules/ecf-related-instructions..(jgo) (Entered: 10/06/2021)

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  • 10/06/2021
  • Docket***NOTICE TO ATTORNEY REGARDING CIVIL CASE OPENING STATISTICAL ERROR CORRECTION: Notice to attorney Richard R. Best. The following case opening statistical information was erroneously selected/entered: County code Albany; Fee Status code none (no fee required);. The following correction(s) have been made to your case entry: the County code has been modified to New York; the Fee Status code has been modified to wv (waived);. (jgo) (Entered: 10/06/2021)

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  • 10/05/2021
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  • Docket(#6) REQUEST FOR ISSUANCE OF SUMMONS as to Igor Palatnik, re: #1 Complaint. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/05/2021)

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  • 10/05/2021
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  • Docket(#5) REQUEST FOR ISSUANCE OF SUMMONS as to Vitaly Fargesen, re: #1 Complaint. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/05/2021)

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  • 10/05/2021
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  • Docket(#4) REQUEST FOR ISSUANCE OF SUMMONS as to CanaFarma Hemp Products Corp., re: #1 Complaint. Document filed by Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/05/2021)

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  • 10/05/2021
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  • Docket(#3) NOTICE OF APPEARANCE by Lee Attix Greenwood on behalf of Securities and Exchange Commission..(Greenwood, Lee) (Entered: 10/05/2021)

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  • 10/05/2021
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  • Docket(#2) CIVIL COVER SHEET filed..(Best, Richard) (Entered: 10/05/2021)

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  • 10/05/2021
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  • Docket(#1) COMPLAINT against CanaFarma Hemp Products Corp., Vitaly Fargesen, Igor Palatnik. Document filed by Securities and Exchange Commission..(Best, Richard) (Entered: 10/05/2021)

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