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Cannabis Entrepreneur Sues Captor Capital For Fraud, Breach Of Contract

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Cannabis Entrepreneur Sues Captor Capital For Fraud, Breach Of Contract

A California entrepreneur is suing cannabis company Captor Capital (CSE: CPTR) (OTC: CPTRF), alleging fraud and breach of contract.

Matt Longo, who founded California cannabis extraction company Mellow Extracts, filed the suit in Los Angeles. He is claiming almost $3 million in damages. The dispute involves two Captor-owned California dispensaries working under the Med Men (CSE:MMEN)(OTC: MMNFF) brand.

Captor Capital is based in Toronto, but operates most of its business in California. Its subsidiaries include manufacturing, distribution and retail companies.

Bait-and-Switch Fraud Accusations

Longo was also the license holder for two Med Men dispensaries located in Santa Ana and West Hollywood.

That same year Longo was employed by I-5 Cannabis Holdings to become the CEO of an I-5 subsidiary called ICH California Holdings.

I-5 was later purchased by Captor Capital.

According to the lawsuit text, Longo agreed to sell Mellow Extracts to I-5 Cannabis in 2018, for the price of CA$1.5 million ($1.1 million), paid in 3,750,000 shares of stock in I-5 Cannabis.

The lawsuit claims that the payment was delayed, and the I-5 shares were replaced at the time of payment by Captor Capital shares issued with a 12-month restriction for sale.

The shares he finally received allegedly carried a market value of CA$525,000, well below the C$1.5 million he was promised.

Breach of Contract

In 2018, Captor Capital hired Longo to serve as Director of Manufacturing & Cultivation.

As the lawsuit follows, the Employment Agreement established a $7,500 monthly pay for Longo for a 5-year term.

It also included a clause under which the agreement could only be terminated by Captor without cause upon a 90 day’s notice with 18-month severance payment, or for cause.

Longo is claiming that Captor never paid him any compensation for his work, and the agreement was never formally terminated.

The lawsuit also includes accusations of deceit and breach of oral contracts from Captor Capital and its subsidiary ICH California Holdings in relation to Matt Longo’s role as CEO and license owner of two California dispensaries that operate under the Med Men brand and are owned by Captor Capital.

Captor Capital did not reply to Benzinga's request for comments.

Photo by Tingey Injury Law Firm on Unsplash, with graphics by Ilona Szentivanyi, Copyright: Benzinga.

 

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