Snowmass home part of SEC fraud case against marijuana stock trader
The U.S. Securities and Exchange Commission has accused a Colorado marijuana businessman of engaging in a $7 million securities fraud that helped him buy a Snowmass Village home for nearly $2 million, a $687,000 condo in the Denver area, and a piano and two vehicles for $100,000, among other questionable dealings.
On Monday, the SEC launched a two-pronged legal action against Denver resident Jeffrey O. Friedland and two limited liability companies for allegedly committing fraud through an Israeli medical marijuana company.
In addition to its 36-page lawsuit, the SEC also filed an emergency motion to freeze Friedland’s assets “wherever located, that are derived directly or indirectly from the proceeds of Friedland’s fraudulent sale of securities alleged in the commission’s complaint,” states the motion, which also seeks a hearing on the matter. The filings were made in Denver federal court.
The SEC also said it has not notified Friedland of the court action because there “is a risk that stolen investors’ funds or assets purchased with stolen investor funds may be transferred, dissipated or secreted.”
A message left with Friedland was not returned this week. Christian D.H. Schultz, assistant chief litigation counsel for the SEC, declined to comment Wednesday, referring media inquires to the SEC’s press division, which did not respond to a message from The Aspen Times.
The SEC claims Friedland, 67, publicly promoted penny stocks in OWC Pharmaceutical Research Corp. of Israel from February 2016 to September 2017, while failing to notify potential investors he “had been paid millions of shares of stock by OWC to promote the company to the press and investing public, and that stock constituted more than 75 percent of his holdings, dwarfing his direct investment interest in OWC.” It is against federal securities laws to publicize a company’s stock for compensation without disclosing that.
Friedland allegedly dumped the 5.1 million shares he received to campaign for the stock, as well 1.3 million shares he bought for $120,000 in 2013, for about $7 million in 2017, the complaint alleges.
“Between February 2016 and August 2017 … Friedland sent emails and participated in interviews on OWC’s behalf without ever disclosing that he had been hired by OWC to handle its media and investor relations and had been paid to do so with millions of shares of OWC stock,” says the suit. “Friedland also never disclosed that he was in the process of liquidating his OWC holdings and, in fact, told investors his investment in OWC was ‘long term’ and ‘we believed in it then, we believe in it now’ on or around days when he was selling OWC stock.”
A former owner of retail pot shops in Breckenridge and Crested Butte, as well as a cannabis cultivation center near Steamboat Springs, Friedland wrote the book “Marijuana: The World’s Most Misunderstood Plant.”
Pitkin County property records show Friedland’s wife, Kathy, bought a single-family home in Snowmass Village for $1.97 million and deeded the property to Aspen Upper Ranch LLC, which has a Denver address.
The SEC contends that purchase was part of Friedland’s ill-gotten gains he concealed by putting the property under the ownership of an LLC.
“The Friedlands transferred to Aspen (the LLC) the ownership of the nearly $2 million Snowmass, Colorado, home that they purchased for cash in August 2017 using proceeds from Friedland’s fraudulent sales of OWC stock,” the suit says.
Friedland was the featured speaker at the Aspen Business Luncheon in August 2016.
Luncheon organizer Todd Shaver said he met Friedland at a gathering at an Aspen home, leading him to invite Friedland to speak at the luncheon.
“He wasn’t blatant about it,” Shaver said in response to a question of whether Friedland promoted the stock at the luncheon, adding that Friedland’s talk “was entertaining, and I don’t remember thinking that he was breaking any rules.”
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