The U.S. Securities and Exchange Commission has reached a $137K settlement with a Missouri attorney they allege misrepresented how he was going to use investments in two entities he incorporated purportedly to launch a medical marijuana business, the agency announced.
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The SEC said Corbyn W. Jones, of Kansas City, agreed to disgorge $82,700 with prejudgment of interest of $3,950, and to pay a $50,000 civil penalty after the SEC sued him in Missouri federal court over his alleged misappropriation and use of investor funds for personal expenses.
According to the SEC’s investigation, Jones co-founded two companies in 2019: Strayne Holdings LLC and 1107 Property Management LLC. After Missouri legalized medical marijuana in November 2018, the SEC saw a boost in submitted business plans related to the cultivation, manufacturing and dispensing of medicinal marijuana.
Jones quickly began soliciting investors, and between February 2019 and January 2020 he secured more than $650,000 from investors across two states, the SEC claims. Jones made oral misrepresentations and provided written offering materials to the investors that claimed Strayne and 1107 Property Management would use investor funds for “various operational expenses.”
In addition to the salary he informed investors he would collect, Jones was found to have used an extra, undisclosed $83,000 on personal expenses between March 2019, and January 2020, according to the SEC.
Jones is CEO of both businesses and indirectly owns a 42% stake in each of them, the SEC said. The federal regulator accused the attorney of violating antifraud , including Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
Although an agreement was reached, Jones neither admitted to nor denied the SEC’s claims. As part of the settlement, he agreed to a permanent injunctive relief, an order prohibiting him from serving as an officer or director of any public company, amongst other conditions.
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