"$32 million" for a whole lot of nothing, claims lawsuit.
Mockingbird Cannabis rolled into Mississippi a few years ago as the medical marijuana industry became a reality. Company officials talked big about hiring Mississippi employees and recruiting a stable of Mississippi investors. However, a group of investors recently sued current and former officials of the company, alleging they treated their investments as a slush fund while looting the company.
Mockingbird Investors Winston Thompson, Nathan McHardy, Tonyatta Hairston, Marcus Burger, Kim Hardy, Brandon Baggett, Jay Baker, Patrick Taylor, Palo Giscombe, Christian Groff, Zachary Harvey, Kevin Merritt, and their respective LLC's filed a motion for leave to file an amended complaint against Clint Patterson, Ralph Wilkin, Andrew Bunch, Marcy Croft, Esq., Samuel Millette III, John Coshmich, Richard Brown, Chuck Josenhans, and three John Does in Hinds County Circuit Court on September 18.**
The plaintiffs filed their first complaint on July 3. Millette filed a motion to compel arbitration, arguing the plaintiffs signed an operating agreements that required arbitration to settle disputes. An amended complaint was filed on September 18 and approved by the Court Tuesday.
An Oklahoma crew of Clint Patterson and friends blew into town when the medical marijuana initiative gathered a full head of steam in 2020. Patterson, Wilkin, Bunch, and Croft formed Mockingbird Cannabis, LLC in 2020 and Mockingbird Holdings, LLC in January 2021. They filed Form D's with the SEC stating the companies were exempt from registration.
The medical marijuana initiative made it to the ballot in 2020. The good times were about to roll. Patterson bragged to Mississippi Today in 2022:
Patterson saw the way medical marijuana impacted his home state of Oklahoma, where he started his businesses. Once-abandoned warehouses and factories are going to have second lives as hydroponic grow houses. Property values overall will go up, he said.
His company’s Mississippi operation — Mockingbird Cannabis, named for the state bird — has taken over a 163,000-square-foot building that once housed the state’s Department of Revenue in Clinton. Mockingbird has invested $30 million in the facility, Patterson said, and it will support up to 200 new jobs.Article.
Mockingbird recruited Mississippi investors. The Mockingbird Crew "encouraged" investors to set up LLC's and invest through them. The plaintiffs followed the instructions. The complaint states the defendants pooled the money into a larger LLC. The lawsuit called the arrangement "a pyramid." The company established facilities in Raymond and Clinton.
The complaint claims although Millette told investors the decision was only a speed bump, Patterson eyed getting a medical marijuana license and facility in Missouri. Thompson allegedly told Patterson he could not use the investors' money for such a purpose. The complaint claims Patterson removed Thompson from the board of directors.
Patterson, Wilkin, Bunch, and Croft set up shell companies in Missouri, funding them with $4 million allegedly withdrawn from the Mockingbird (Mississippi) investments, and obtained a license and facility in Missouri. They named the facility "Navarro Farms."
Credit: Mockingbird Facebook page |
The Gang of Four allegedly offered shares of Navarro Farms to the Mississippi investors without disclosing they were already funding the operation. The complaint accuses the Gang of Four of engaging in more shenanigans:
* Investors funds were allegedly used as personal slush funds. The complaint charges Mockingbird paid $2 million in management fees and another $1.5 million in travel expenses in 2021 and 2022 to a number of officials and directors. No records of the compensation were ever produced despite requests from investors, if the complaint is to be believed.
* Patterson and Wilkin allegedly diverted $7 million from Navarro Farms to buy out partners in another operation. The facts of said buyouts are not known as the Defendants (allegedly) would not produce any records.
* The complaint charges Croft shirked her duty as company lawyer to comply with state and federal law as well as any contracts. She stands accused of allowing Patterson to engage in unlawful activity or expose Mockingbird to liability. She did not ensure the company kept adequate financial records while investors money was "misappropriated."
* The 160,000 square foot Raymond facility was valued at $25 million. However, Patterson sold it to Gaylon Patterson of the Patterson Family Trust in Oklahoma for $10 million. Gaylon is Clint's uncle. The complaint claims Gaylon, Gary Patterson, and Elizabeth Patterson are members of the trust. Gary is Clint's firs cousin. Elizabeth is married to Gary.
The trust leased the facility back to Mockingbird at $100,000 per month for 10 years. Investors claim they had no clue the transaction took place.
The plaintiffs claim Millette and Brown consented to the sale as members of the Board. However, they told investors the facility was a fixed asset, not leased property. The complaint states an April 2024 update said the Raymond facility was a company asset while never admitting it was no longer owned by the company. The investors asked for records of the transaction but the defendants allegedly would not provide them.
* The complaint claims Josennhans admitted $8.3 million "had been misappropriated. Wilkin allegedly fessed up to loaning investors' funds to fund operations in other states while lying he divested himself of all Mockingbird and Navarro Farms holdings. However, filings at the Secretary of State's office state Wilkin was still the manager.
* The plaintiffs requested the following records but to no avail: all operating agreements, an organization chart, names of Board members as well as their terms, identities of all corporate officials as well as their starting and ending dates of employment, minutes of all meetings of the Boards of Directors, and a schedule of all who hold "units or interests."
The plaintiffs claim the true state of Mockingbird and Navarro Farm's assets are unknown. The following passage says it all:
The true state of Mockingbird's and Navarro Farm's assets today is unkown. but Plaintiff's losses are clear: There is nothing to show for their investments - Defendants can not even tell them who owns what today - and Mockingbird, which raised as much as $32,000,000 has nothing.
* The lawsuit takes full aim at the Jackson law firm of Cosmich, Simmons, & Brown. It alleges John Cosmich and Brown's brother served on the Navarro Farms Board of Directors. Brown and partner Warchol allegedly solicited investments for "Mississippi Grow" and "Missouri Grow."
Cosmich lawyers stand accused of helping investors establish LLC's while assisting them with background checks and disclosure forms.
The plaintiffs claim Cosmich, Simmons, & Brown PLLC is a "substantial investor" in Mockingbird. Cosmich is allegedly counsel to Mockingbird.
The complaint charges the defendants with the following counts:
I: Violation of Mississippi Code Section 79-29-315, failure to provide records
II: Violating Mississippi Securities Act. The law require sellers of securities to register securities and provide investors with any information needed to make an investment decision.
III: Violation of MSA by Patterson, Wilkin, Bunch, Croft, Brown, Millette, and John Does for selling securities without registering as broker-dealers.
IV: Breach of fiduciary duties
V: Civil Conspiracy.
VI: Aiding and abetting
Attorney Allyson Mills of Lamar Adams fame represents the plaintiffs. The case is assigned to Circuit Judge Debra Gibbs.
* The plaintiffs and their LLC's:
Marcus Burger: NLWH, LLC
Nathan McHardy: Red Work Capital, LLC, Fire Wheel, LLC. Disclosure: McHardy's Briarwood Liquor Store is an advertiser on this website.
Winston Thompson: Cropshare, LLC
Tonyatta Hairston: Felix Allen, LLC
Brandon Baggett: BBG Investments, LLC, Salo Investments, LLC
John Burns: High Times, LLC, High Times Two, LLC
Kimberly Hardy: Generational Wealth Investments, LLC
Palo Giscombe & CHristian Groff: Petit Bois 68, LLC
Zachary Harvey: 2901 Investments, LLC
Patrick Taylor: DFT Capital, LLC
** Defendants
Patterson is CEO of Mockingbird, Navarro Farms, and Navarro Farms Vandalia Oklahoma resident.
WIlkin is COO of Mockingbird and Chairman of the Board of Navarro Farms. Oklahoma resident
Bunch is CFO of Mockingbird. Oklahoma resident
Croft is a Madison attorney and was Chief Legal Officer of Mockingbird.
Millette is a Director of Mockingbird companies
Brown is manager of Navarro Farms and several Mississippi LLC's. He is a partner in the Jackson law firm Cosmich, Simmons, & Brown.
29 comments:
Oh no!
“alleging they treated their investments as a slush fund while looting the company.”
Why do I get the feeling Mockingbird isn’t the only medical marijuana company in Mississippi that might have investors “alleging they treated their investments as a slush fund while looting the company?”
Asking for more than one friend.
the plaintiff investors are stupid mississippi rednecks who got hustled by a smooth line from an out - of - state hustler. what else would you like to know? a fool and his money are soon parted.
This kind of crap was inevitable. Where's Lee Yancey now?
Puff puff pass.
Shocked that companies that were seeking $500k for a 1% ownership had potential for fraud. Not sure this companies investment requirements.
It’s no different than OpenAI and FTX. Just another fast talking nepo-shyster backed by his (((connections))) which is often business as usual in America.
Only certain highly qualified investors have received this invitation.
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Limited time offer!
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Fools and their money...
Looks like a potential future episode of American Greed.
Hard to believe this could happen in the 'Sip, are there any Hotty Toddy connections?
I have no sympathy for those who get scammed while being mixed up in the weed industry. And I don't care how "legal" our esteemed lawmakers made it. It's still a bunch of dope pushers and dope heads.
Yes, all that tax revenue flowing in to state coffers and the unending miracles of this wonder drug!! Hope Not Dope.
I bet many a cartel leader wishes they would have invested in this business opportunity instead of just using US "legal" Weed Sales as a front for their untaxed lower priced indistinguishable dope, right?
The miracle drug!!! From snake oil to tobacco to weed, the substance abusers bring mighty profits. All those chillun cured by Mama and Pappaw's favorite buzz. Win win!
At least one of the investors named in the complaint is featured in your advertisements every day on this blog. Not that it matters, but just jumped off the page.
Don't forget to hit the tip-jar real hard when they pass the plate next Sunday. After all, everybody is pushing SOMETHING or other.
man you could replace everything in your ignorant comment with Medical doctors and prescription Opioids. And we can bet on which one has been more destructive to America. Let ne give you a hibt. The Sassoon and Rothchild families didnt enslave and plunder Imperial China with cannibas. Theydid it with Opium.
Go look in the list of plaintiffs and LLC's. It's included and highlighted.
So Winston Thompson, Antar’s buddy, pocketed a windfall in the Siemens litigation only to blow it on canabais. Sounds about right.
Smoke and mirrors? Even Cheech and Chong wouldn't fall for this grift.
Reefer Madness v2.0
something went wrong in the weed business. Who could have seen that coming...
What's interesting is how much sleaze this new industry has attracted.
Newsflash - this is a securities case…..pretty simple….and very ugly
this is going to be as big a ripoff as the lamar adams / madison timber ponzi scam.
the attorney who headed up the madison timber clawback is attorney for the plaintiffs.
anyone stupid enough to gamble on the medical marijana wild west lottery deserves to loose their money. here's the defense.....defendants gonna say ''this was just a business deal gone bad....sorry''
Does it bother anyone that this type of corporate stupidity seems to happen often in MS? I mean this, express grain, Lamar Adams, just off the top of my head? As Dave Chapelle famously said “who gave these people money?” Seems like the wealthy in this state are some of the most gullible people on earth? Strange indeed.
How many (more) times do I need to tell y'all, no good comes from weed. Not ever.
Why ya think it’s called “dope”?
Hand cuffs and jail ain’t cute for these folks.
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