A New Jersey law firm and its managing member are accused in a suit of misappropriating $3.2 million from investors in a failed cannabis startup company.

Jeanette Frankenberg and her firm—Stern, Lavinthal & Frankenberg of Roseland, New Jersey—had an alleged "unlawful agreement" with Frankenberg's husband, Louis Campisano, and others to allegedly mislead the investors about the status of the cannabis project, according to a complaint filed in Essex County, New Jersey Superior Court. After the cannabis project failed in 2017, investor funds were placed in the trust account at Frankenberg's firm, even though the firm allegedly had no relationship with the investors and was not authorized to accept such funds, according to the complaint.

The plaintiff is BBCK One Holding Corp., an entity formed by four people who were solicited to invest in the cannabis project. It named as defendants a company called West Coast Management, which allegedly develops and manages cannabis cultivating facilities, as well as its owner, Howard Helfant of Boca Raton, Florida. Other defendants were Boca Raton, Florida, attorney Charles Jaffee and his firm, Charles L. Jaffee P.A.

On Oct. 5, the plaintiffs filed an amended complaint adding New Jersey-based Frankenberg and her firm as defendants.

The amended complaint includes counts for fraud, conspiracy to misappropriate funds, aiding and abetting the commission of fraud, conversion, fraudulent concealment and theft.

In March 2017, at the time they made their investment in exchange for a 20% equity stake in West Coast, the investors were told their funds would pay for infrastructure at a cannabis facility in Yolo County, California, according to the lawsuit.

The defendants allegedly misrepresented the project, but Jaffee, Campisano and Frankenberg knew that it was not progressing nicely and was in fact defunct, according to the amended complaint. Jaffee allegedly received funds to reimburse the plaintiff investors for their losses, but the money was placed in the Stern Lavinthal trust account, the complaint claims.

"Campisano was confronted by plaintiff to explain why the West Coast-related monies that had been designated for return to plaintiff had been deposited into the SLF Firm's trust account back in 2018, but had not been returned to plaintiff. Campisano failed to provide an adequate explanation as to the diversion of plaintiff's funds. To date, the West Coast-related monies invested by plaintiff … have not been returned to plaintiff," the complaint states.

Frankenberg and her law firm denied the fraud, conspiracy, theft and other claims in the suit in an answer filed Oct. 20.

The answer also asserts that if any party is at fault in the case, it is one of the other defendants. The answer also said the plaintiffs failed to plead fraud with specificity, and that if the plaintiffs were damaged, any such damages were caused by the actions or inactions of third parties over which they exercise no control.

Frankenberg and her law firm also said in the answer that if the plaintiff suffered any damages, such damages will be diminished by comparative negligence.

Attorneys William Healey and David Ward of Kluger Healey in Lincroft, New Jersey, represent the investor plaintiffs in the case. They did not respond to a reporter who called about the case.

Opposing counsel Thomas Doherty of McCarter & English in Newark represents Frankenberg and her firm.

"We believe that any and all allegations of wrongdoing against Ms. Frankenberg and Stern, Lavinthal & Frankenberg are unfounded and baseless. Accordingly, they have been denied in the answer that has been filed. We are confident that our clients—only recently brought into this case based on allegations that are several years old—will be vindicated upon a full consideration of all pertinent facts by the court," Doherty said.