Massachusetts Secretary of the Commonwealth William Galvin has issued a warning to potential cannabis industry investors to be wary of scams and unscrupulous operators after filing fraud charges against two entrepreneurs in the state. In an alert released by Galvin’s office, the secretary urged investors to approach offers for unregistered securities from unlicensed sellers with caution, noting that the cannabis industry is not monitored by federal regulators or state-chartered banks.
“No one regulator can police this marketplace,” Galvin said in the statement. “My Securities Division intends to scrutinize these offerings to proactively prevent investor harm.”
Cannabis Entrepreneur Charged with Fraud
Galvin’s warning came after his office filed fraud charges against David Caputo and his marijuana cultivation company, Positronic Farms, Inc. According to the complaint in the case, Caputo raised $1.3 million from 40 investors for a recreational marijuana cultivation facility that would also lease space to other cannabis businesses. Caputo had solicited investments from at least 735 prospective investors using methods including press releases, videos, and an unspecified “online news portal.”
Caputo had allegedly tried to raise money “from just about any investor willing to contribute monies,” according to the complaint, which added that the company was in the process