The Securities and Exchange Commission has warned the public to be vigilant when investing in the flourishing cannabis sector as scam artists are cashing in.

It has charged Texas-based Greenview Investment Partners with defrauding investors with false promises of massive returns in marijuana-related businesses. The agency accuses Greenview founder Michael Cone of ripping off investors to the tune of $3.3 million in a lawsuit launched this week. It has warned that nefarious forces are targeting hot industries like marijuana in order to rip off investors and it urged the public to beware of the risks of fraud and market manipulation.

The SEC said anyone thinking of investing in the cannabis industry should check the background and license status of anyone selling opportunities.

It pointed to a free search tool that anyone can use. It said that if somebody is promising a guaranteed high rate of return on an investment, it’s likely to be a fraudulent scheme, particularly if there’s a claim of no risk. It also warned against people calling you, texting or getting in touch via social media to promote an opportunity, as it could well be a scam. As with any investment decision, ask questions, perform careful research and understand the risks involved, said the SEC.

It accused Cone of using misleading marketing materials, falsely claiming to have a long record of profitably investing millions in cannabis-related businesses and employing boiler room sales staff who made cold calls to investors.

“Greenview allegedly exploited investor interest in the marijuana industry and lied about high returns and the backgrounds of its key executives,” said Shamoil T. Shipchandler, director of the SEC’s Fort Worth Regional Office. “Investors must remain vigilant and not let the fear of missing out dupe them into making bad investment decisions.”

The SEC has filed the complaint in the US District Court for the Northern District of Texas, charging Greenview and Cone with securities fraud and violations of the registration provisions of the federal securities laws. It reported that Cone agreed to an officer-and-director bar and a permanent injunction. The complaint says he spent investors’ money on designer clothes and luxury cars, and on payments to earlier investors in order to prolong the alleged scheme.

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