Pubdate: Fri, 27 May 2016
Source: Boston Globe (MA)
Copyright: 2016 Globe Newspaper Company
Contact: http://services.bostonglobe.com/news/opeds/letter.aspx?id=6340
Website: http://bostonglobe.com/
Details: http://www.mapinc.org/media/52
Author: Beth Healy

SEC FILES FRAUD CHARGES IN ALLEGED MEDICAL MARIJUANA SCHEME

Federal securities regulators in Boston filed civil fraud charges 
Thursday against a company and four individuals allegedly involved in 
a scheme to steal from investors in a purported medical marijuana venture.

According to a complaint filed in federal court in Boston, 
Christopher R. Esposito, 49, of Topsfield, raised more than $550,000 
from investors in 2011 and 2012 in his Lionshare Ventures. He 
allegedly used the majority of the funds for unauthorized personal 
expenses, such as groceries and pet care, and then spent $75,000 to 
secretly take control of Cannabiz Mobile Inc. without disclosing that 
to investors.

Cannabiz had originally claimed to be in the business of gold 
exploration in Brazil, the Securities and Exchange Commission said in 
its complaint. The company later said it serviced the medical 
marijuana industry out of Cambridge. Medical marijuana became legal 
in Massachusetts in 2012, the 18th state to legalize it.

In reality, Cannabiz operated out of Lionshare's office in Danvers, 
the SEC said.

In the second phase of the alleged scheme, from 2012 to 2015, the SEC 
said, Esposito and three other people participated in selling shares 
of Cannabiz. The company made false statements in its public filings 
with regulators, the SEC said.

Esposito's home voicemail was full and he had not yet hired a lawyer 
the SEC was aware of.

Paul G. Levenson, regional director of the SEC in Boston, said, "We 
continue to be focused on individuals who would abuse their control 
of companies in the micro-cap markets, where there's very little 
visibility for investors."

Cannabiz was a penny stock, also known as a micro-capitalization 
company. Between the Lionshare fund-raising and sales of the stock, 
investors allegedly lost close to $1 million, according to the complaint.

Esposito is not a licensed broker, according to public records. He 
has previously been sanctioned by the Massachusetts Securities 
Division, including a 10-year ban from applying for a license here 
that was imposed in 1998.

Also named in the complaint is James Gondolfe, 48, of Cambridge, who 
is chairman of Cannabiz, the SEC said. Gondolfe did not return a 
phone message left at his listed number.

Two other people, one from Florida and one from California, also were named.
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MAP posted-by: Jay Bergstrom