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 1. Home
 2. Personal Finance
 3. Financial Crime


FINANCIAL CRIME




UP IN SMOKE: $60 MILLION MARIJUANA STARTUP CO-OWNED BY RAPPER WAS A PONZI
SCHEME, FEDS SAY

Last Updated: May 27, 2023 at 11:23 a.m. ET First Published: May 23, 2023 at
4:26 p.m. ET
By

LUKAS I. ALPERT

  comments


THE SEC SAYS MONEY RAISED FOR WEEDGENICS WAS SPENT ON CARS, HOUSES AND ADULT
ENTERTAINMENT — AND TO PROP UP RAPPER BIGRIGBABY’S CAREER

REGULATORS SAY THAT MARIJUANA STARTUP WEEDGENICS WAS ACTUALLY A PONZI SCHEME AND
THAT THE $60 MILLION INVESTED IN IT WENT UP IN A PUFF OF SMOKE.

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A California startup that raised $60 million to develop a marijuna-growing
operation was actually a Ponzi scheme with the money used to buy luxury cars,
houses and adult entertainment and to sustain the rap career of one of the
company’s founders, federal regulators said.

The Securities and Exchange Commission alleged in a civil complaint filed in
California federal court that WeedGenics and its owners, Rolf Max Hirschmann and
Patrick Earl Williams, promised investors that their money would be used to
expand existing operations in California and Nevada.

But investigators say the company, which was legally registered as Integrated
National Resources Inc., was a sham and never operated any marijuana-related
businesses at all.


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“Rolf Hirschmann and Patrick Williams allegedly had no real company, no product,
and no business, yet despite this, they promised investors everything and then
delivered nothing,” said Michele Wein Layne of the SEC.

Instead, the agency said the money was mostly funneled into the pockets of
Hirschmann, 52, of Eagle, Idaho, and Williams, 34, of St. Petersburg, Fla., with
$16.7 million being used to pay back earlier investors.

The SEC says that between 2019 and April of this year, the pair managed to raise
$60 million from 350 investors.


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It wasn’t immediately clear if the men had retained attorneys. A message left
for Williams wasn’t immediately returned, and numbers listed for Hirschmann
appeared to no longer be in service.

On Tuesday, the SEC said it had received an emergency court order to shut the
company down and seize its assets.

According to court filings, Hirschmann and Williams had promised investors
returns of up to 36%, claiming the business was well under way and that their
money would be used to expand existing operations. When fully operational, they
claimed the company would generate tens of millions of dollars annually.

When investor money was received, the men would transfer it through a multitude
of accounts to obscure its origins, and then use it to buy jewelry, cars and
real estate.



Investigators say Hirschmann took pains to obscure his identity from investors,
using a fake name, Max Bergmann, in any communications he had with them.
Williams operated behind the scenes but used investor money to prop up his
career as a rapper known as BigRigBaby, according to court papers.

In its filings, the SEC named a number of companies controlled by Williams and
Hirschmann, with names like Oceans 19 Inc., Autobahn Performance LLC and Bagpipe
Holdings LLC, they say have bank accounts holding millions in misappropriated
money. 


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THERE’S A CLAUSE IN THE DEBT-CEILING DEAL THAT MEANS BAD NEWS FOR SOCIAL
SECURITY

OLDER WOMEN ARE ABOUT TO INHERIT A GUSHER OF CASH

DOW FALLS 250 POINTS AFTER JOB OPENINGS DATA AS DEBT-CEILING VOTE LOOMS IN
CONGRESS

IS REAL ESTATE A GOOD PATH TO FINANCIAL INDEPENDENCE?

STOCKS MAY HAVE PUT THE DEBT CEILING BEHIND THEM, BUT HERE ARE MORE RISKS TO THE
2023 MARKET RALLY


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READ NEXT


READ NEXT


PICKS: ‘I ENDED THE RELATIONSHIP AFTER A YEAR.’ I’M 59 AND HAVE $750K SAVED FOR
RETIREMENT. I PAID A PRO $3K TO MANAGE MY MONEY, BUT DIDN’T FEEL THAT WAS WORTH
IT. WHAT’S MY NEXT MOVE? 

Have a question about your financial adviser or looking for a new one? Email
picks@marketwatch.com.


MORE ON MARKETWATCH

 * ‘When I ran it past the missus, she went ballistic’: I want to buy a $40,000
   car, but my wife said no. Then things really got weird.
 * ‘I’m 63 and desperately hate my work’: Should I pay off my mortgage, claim
   Social Security and quit my job?
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   suddenly — and his wife says she will receive her late husband’s share
 * ‘He’s content living paycheck to paycheck’: My husband won’t work or get a
   driver’s license. Now things have gotten even worse.


ABOUT THE AUTHOR

Lukas I. Alpert


Lukas is a reporter for MarketWatch focusing on financial investigations. You
can follow him on Twitter @lalpert1.



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