Facts

From August 2015 to December 2017, Guy Scott Griffithe and Robert William Russell sold investors purported shares in SMRB LLC, a Washington-licensed recreational cannabis company owned by Russell. These shares were sold through Griffithe's holding company, Renewable Technologies Solution, Inc. The investors were told that the investments would be used to operate and improve SMRB, and resulting profits would be distributed to them quarterly. In reality, selling any bona fide ownership stake in SMRB to the investors required pre-approval from the Washington State Liquor and Cannabis Board, which Griffithe and Russell never had and never sought. Instead, they misappropriated the investment funds for various personal and unrelated business expenses, including several luxury cars purchased by Griffithe for himself and others and a yacht purchased by Russell for him and his wife. The two misled investors into thinking SMRB was profitable by paying profit distributions from other investors' money in a Ponzi-like fashion, which enabled them to prolong their scheme. In January 2021, the Securities and Exchange Commission filed suit against Griffithe and Rusell.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that Griffithe and Russell illegally and fraudulently sold securities; that they defrauded investors through materially false and misleading statements; and that they unjustly enriched themselves.

DEFENDANTS' CONTENTIONS: Defendants neither admitted nor denied the allegations in the complaint but agreed to a bifurcated settlement wherein the court would determine any monetary remedies against them.

Result

Judgment against defendant Russell resulted in disgorgement and civil penalties and interest totaling approximately $698,232; Judgment against defendant Griffithe resulted in disgorgement and civil penalties and interest totaling approximately $5,312,071. The two are also permanently enjoined from violating various provisions of the Securities Exchange Act. Furthermore, Griffithe is permanently enjoined from participating in any unregistered offering by an issuer, and from acting as an officer or director of any issuer with a registered class of securities or that is required to file reports under the Securities Exchange Act.