SEC files alleges fraud against hemp operator for using investments for gambling money

Last week, the U.S. Securities and Exchange Commission announced fraud charges against Robert Tye Cournoyer and two CBD-related companies that he controlled for their alleged misappropriation of investor funds and false and misleading statements to investors.

Cournoyer also never told investors that the SEC had previously charged him with fraud, and a court sanctioned him for that conduct.

This complaint, filed in federal district court in Colorado, alleges that between at least January 2019 and February 2022, Cournoyer, through Green Equity Group LLC and RS Group Holdings LLC, raised approximately $1.27 million from investors while representing that their funds would be invested in various CBD-related business ventures. Instead, the complaint alleges that Cournoyer used at least $755,000 of investor funds for personal expenses, including gambling, rent, and luxury purchases, and also made substantial cash withdrawals of investor funds.

CBD scheme

Cournoyer founded Green Equity in November 2017 to capitalize on opportunities in the hemp industry. He partnered with a Colorado-based hemp business, called the “Colorado Business,” which agreed to find hemp-related opportunities that Cournoyer, acting through Green Equity, would fund by finding and soliciting investors. He told investors in Green Equity and RS Group that he would invest their money in various projects, including a bottling plant, hemp and CBD products, and hand sanitizer production.

In October 2018, the Colorado Business acquired an inoperative bottling facility, which Cournoyer told investors would be used for manufacturing hand sanitizers for casinos and CBD coffee, all funded by Green Equity investors. Although Green Equity helped fund the purchase of the Bottling Plant in 2018, the project was abandoned and the facility was never operational.

In addition to the bottling plant scheme, Cournoyer told investors they would be buying hemp biomass, but that was also a misleading statement.

The SEC claimed that Cournoyer combined the accounts of RS Group and Green Equity and that investors had no say in the Green Equity operations as Cournoyer had sole ownership of the accounts.

Gambling money

The SEC alleged that often when investors deposited money into the accounts for RS Group, Cournoyer quickly withdrew the money for personal expenses and gambling. The SEC said that Cournoyer was gambling full-time starting in 2019 or 2020. According to the complaint:

“For example, on June 1, 2019, a Green Equity bank account had a balance of $501.37. The bank account received at least $90,000 in investor deposits that month, which Cournoyer spent, for example, at the Mirage and the Bellagio in Las Vegas, Panerai luxury boutique in Las Vegas, Hugo Boss in Dallas, and for his personal residence’s lease payment and personal credit card payments. On June 30, 2019, the account had an ending balance of $8,955.12.”

Investors mislead

In addition to the uncompleted cannabis projects, Cournoyer told investors he had a law degree from the University of Florida, which wasn’t true. He also told the investors that he had “over twenty-five years of experience in private equity,” including on Wall Street, and Series 3, 7, and 63 licenses, which wasn’t true.

He also failed to inform investors that he was previously barred by the SEC and enjoined by a federal court in connection with violations of federal securities laws.

In this case, the SEC said it wants permanent injunctions, disgorgement with prejudgment interest, and civil penalties against Cournoyer and his companies, as well as a conduct-based injunction and officer-and-director bar against him.

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