Arias Intel, a publicly traded cannabis company, has gone dark among accusations of fraud and management mishandling. The company's website is gone, and according to reports, its office is empty and its telephone is not in service.
Moreover, company CEO, Kevin Gillespie, is under investigation by the SEC.
According to the SEC's website, the SEC’s complaint also charges three others who began laying the groundwork for a pump-and-dump scheme. "The SEC alleges that Kevin Gillespie, Annetta Budhu, and Andrew Hackett entered into a number of sham stock and debt issuances, and Hackett wound up communicating with someone he believed to be a participant in the scheme who in reality was an undercover FBI agent."
More on the SEC complaint below. But what is Gillespie up to today?
Just this week, the very same Kevin Gillespie, was sending messages through his LinkedIn page, trying to raise money for another venture, called "Standard Farm Corp."
According to the presentation that Gillespie sent out, Standard Farm intends to "create an operating portfolio of global properties through investment and incubation to exit strategy."
The presentation also says that Standard Farm will: "Evaluate target investments’ business models, value chain, and operational characteristics to reduce expenses, improve margins, and grow the businesses organically, as well as explore follow-on acquisitions for potential synergies, and ultimately seek an appropriate exit strategy via a merger, acquisition or IPO."
The company is attempting a "$25 million Series A Offering at $1.00 per share."
How is Gillespie allowed to solicit an offering when he just tanked one company and is under SEC investigation?
According to his LinkedIn page, "Mr. Gillespie is the Founder, President and CEO of First Harvest Corp., founder of Arias Intel Corp., a publicly-traded company (ASNT), which is a platform for tech, media and gaming with a focus on the cannabis industry and emerging growth sectors."
Furthermore, Gillespie is no stranger to accusations of misuse of corporate funds.
As reported in the Tampa Bay Times, Gillespie, along with his partners at First Harvest Financial, launched Cannavoices Lifestyle magazine, but within 4 months of the initial issue, the partners were embroiled in a legal battle.
In a lawsuit filed in Hillsborough circuit court, three Cannavoices shareholders — Kevin Gillespie, Danny Hammett and Joel Prackler — accuse Robert McCann, Cannavoices president, of "wasting corporate assets" and "damaging the goodwill and reputation" of the company. The suit seeks $20 million in damages.
Among other allegations, the lawsuit accused McCann of giving himself a pay raise, from $7,500 to $25,000 monthly, and using corporate cash to pay for personal expenses and travel.
McCann denied wasting corporate assets.
The lawsuit also said McCann "unilaterally" amended Cannavoices' articles of incorporation to remove Gillespie as president and director, then inserted himself. That, the suit said, amounted to a misrepresentation to the state.
There is one significant problem with that allegation, according to papers filed by McCann's attorneys. Gillespie agreed to be removed as an officer after selling his shares in Cannavoices to McCann for $1 million, McCann said in court documents. Gillespie received a $300,000 down payment for the sale and was to have received $70,000 per month for 10 months.
In fact, McCann filed with the court an Aug. 11 notarized "equity purchase agreement" signed by Gillespie and McCann.
In a motion to the court, he accuses Gillespie of misusing corporate cash and making questionable withdrawals from company accounts of up to $400,000. McCann also said he was authorized to get the higher salary rate.
In August, 2018, Arias Intel said in a SEC filing, "The Company has not generated revenue and during the three months ended June 30,2018 incurred a net loss of $3,008,539. The Company has an accumulated deficit of $20,290,844 as of June 30, 2018."
Where did all that money go? Over $20 million in debt with no revenue?
Here is where some of the money went:
According to the company's 10-K filing with the SEC, "Kevin Gillespie is the Chief Executive Officer, President, Chairman of the Board and the largest shareholder of the Company. He was paid $387,643 and $270,571 by the Company as a subcontractor for the years ended March 31, 2018 and 2017, respectively. Mr. Gillespie is (also) the majority shareholder or sole owner of related parties that were paid $55,330 and $257,893 for services to the Company, including accounting, administration, management, marketing, IT support, due diligence and evaluation of acquisition candidates, for the years ended March 31, 2018 and 2017, respectively. Mr. Gillespie is (also) the majority shareholder or sole owner of related parties that were paid $60,000 and $126,265 for rent for the years ended March 31, 2018 and 2017, respectively."
That adds up to $1,157,702 paid either directly to Gillespie or to entities he controlled.
Details on the SEC "Pump and Dump" complaint against Gillespie:
According to the SEC complaint, filed in federal court in the Southern District of California, Gillespie (CRD #2485051) and fellow defendants Gannon Giguiere, Oliver-Barrett Lindsay, Andrew Hackett, and Annetta Budhu coordinated matched trading and manipulated prices in three penny stocks through fraudulent pump-and-dump schemes.
The SEC identified the penny stock issuers as Kelvin Medical, Inc. (KVMD, a purported medical supply company), Arias Intel Corp (aka First Harvest Corp aka American Riding Tours Inc., ASNT, a purported Nevada motorcycle tour company that then became a digital media company), and Eco Science Solutions, Inc. (ESSI, a purported technology company focused on the cannabis industry).
The Complaint states that Gillespie, who served as Arias Intel Corp (First Harvest Corp and First Harvest Opportunity Fund 1)'s chief executive officer, worked with Budhu and Hackett to pump-and-dump the ASNT stock in 2017, with Gillespie causing ASNT to issue Hackett a sham $300,000 convertible promissory note while asking a witness—who was working with the FBI—to promote ASNT's stock on a website called TheMoneyStreet.com in order to solicit investors during the scheme's "pump" phase.
During this time, Gillespie purportedly effected a reverse merger between ASNT and Cannavoices, Inc., a private company Gillespie controlled, causing Cannavoices shareholders to exchange their shares for shares of ASNT. In describing the shell company of ASNT, the SEC also implicated other entities which entered into share purchase agreements and other transactions with ASNT, including Baywall Inc. and FreeLife Investments, Inc.
Finally, Michael Toups, was Managing Director, Partner and COO of First Harvest Financial, and was charged by the Securities Exchange Commission (SEC) with fraud. Toups worked with Gillespie at First Harvest Financial.
Any patterns emerging?