SALT LAKE CITY (CN) - A marijuana investment company defrauded a mother and daughter of $150,000 in "worthless" unregistered stock, the women claim in court.
Gena and Susan Golden sued Mentor Capital and Labertew & Associates, on March 19 in Federal Court.
The Goldens say that Richard Golden, husband to Gena and father to Susan, who is not a party to the case, tried to find a "suitable" investment for them last year.
He heard about free-trading Mentor common stock in March 2014, according to the complaint.
Mentor, formerly known as Main Street Capital, buys companies that serve the legal and medical cannabis industry, the complaint states. Main Street Capital filed for bankruptcy in California in 1998, and the SEC entered a cease-and-desist order against Mentor for selling unregistered securities in 2003, according to the lawsuit.
In his search, Richard Golden reviewed a blanket opinion letter drafted by Michael Labertew, of Labertew & Associates, on Mentor's website, the Goldens say.
The letter contained "numerous false, inaccurate and misleading statements," including that a transfer agent for Mentor was authorized to issue the company's warrants or common shares without a restrictive legend, according to the complaint.
Labertew & Associates allegedly stated that the warrants or shares were exempt from federal registration requirements and approved by the bankruptcy court for Main Street Capital.
So Richard Golden purchased $146,250 in Mentor stock in March 2014. The shares did not have a restrictive legend on them, signifying that the stock was "freely tradable," the Goldens say.
"Golden attempted to trade this stock at several national brokerage firms all of which refused to accept the shares without a letter from the issuer," the complaint states. "Mentor provided an issuer letter but those same brokerage firms rejected it."
The Goldens say their shares are "worthless."
"L&A made several false, misleading and inaccurate statements in its BOL knowing that potential investors such as Golden would be relying upon those statements," the lawsuit states.
Labertew was separately charged with securities fraud in Texas, in 2004. In that case, he allegedly received 410,220 unregistered shares from Rocky Mountain Energy while acting as company counsel, and was ordered to pay $62,088 in disgorgement.
Labertew is not listed as a party to the Goldens' complaint, though his firm is.
Mentor, registered in Delaware and based in Ramona, Calif., calls itself "a public operating company that acquires and provides liquidity for medical and social use cannabis companies," on its home web page, mentorcapital.com.
Mentor "participates in the legal recreational marijuana market," its website states. "However, Mentor's preferred focus is medical and the company seeks to facilitate the application of cannabis to cancer wasting, calming seizures, Parkinson's disease, reducing ocular pressures from glaucoma and blunting chronic pain."
The Goldens, of Florida, seek damages and punitive damages for securities fraud, conspiracy, negligent misrepresentation and bad faith.
They are represented by Sean Egan.
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