Legal Weed Company Gets Some More Lawyer-Shareholders
The marijuana vending machine startup Medbox Inc. got smoked last month by the U.S. Securities and Exchange Commission, which accused the cannabis company of filing sham earnings reports. It was the latest in a series of setbacks for Medbox, now called Notis Global Inc., and its growing ranks of lawyer-owners.
April 21, 2017 at 03:31 PM
19 minute read
The marijuana vending machine startup Medbox Inc. got smoked last month by the U.S. Securities and Exchange Commission, which accused the company of filing sham earnings reports. It was the latest in a series of setbacks for the cannabis company, which last year changed its name to Notis Global Inc.
The SEC's March 9 announcement that it had charged Medbox with falsely touting “record” revenues based on illegal stock sales was only the latest round of legal trouble for the embattled dispensary. Medbox founder Vincent Mehdizadeh, once touted as the legal weed industry's first potential billionaire, agreed to pay $12 million to settle his part of the SEC case.
Mehdizadeh and other Medbox executives—including former CEO Bruce Bedrick—have faced multiple securities class actions and shareholder derivative suits alleging that they failed to fulfill their fiduciary duties. As part of a settlement agreement in one of those derivative suits, a judge in the Central District of California ordered on March 3 that Mehdizadeh and Bedrick transfer a combined 2.3 million shares of company stock into an account covering plaintiffs attorney fees. Any stock left in the account after the lawyers got paid would go to shareholders.
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