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.