SEC Charges Co-Founder of cannabis companies with fraud

The Securities and Exchange Commission today announced that Corbyn W. Jones, a licensed attorney who resides in Kansas City, Missouri, has agreed to settle charges that he misrepresented to investors in two private start-up medical marijuana companies how their proceeds would be used.

The SEC’s complaint alleges that Jones, the co-founder and chief executive officer of Strayne Holdings LLC and 1107 Property Management, LLC, raised more than $650,000 from five investors in two states from February 2019 through January 2020 and misrepresented the intended use of funds to investors. The complaint also alleges that Jones made oral misrepresentations to investors and provided written offering materials to the investors that claimed Strayne and 1107 Property Management would use investor funds for various operational expenses. Finally, the complaint alleges that Jones used at least $80,000 of investor funds for purely personal purposes.

The SEC’s complaint, filed in federal court in Missouri, charges Jones with violating the antifraud provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Without admitting or denying the charges, Jones agreed to permanent injunctive relief, an order prohibiting him from acting as an officer or director of any public company, and to pay disgorgement of $82,733, prejudgment interest thereon of $3,950, and a civil penalty of $50,000. The settlement is subject to court approval.

The SEC’s investigation was conducted by Ruta G. Dudenas and Ann Tushaus, supervised by Amy S. Cotter in the Chicago Regional Office. Jonathan S. Polish will lead the litigation.