The founders of a Canadian hemp company who misappropriated funds and then threatened witnesses who testified against them have pled guilty in a New York federal court.
Igor Palatnik and Vitaly Fargesen of CanaFarma Hemp Products Corp., Vancouver, were accused of soliciting investments in the penny stock company by using a fraudulent business plan and marketing budget. Prosecutors said the pair swindled investors out of about $14 million, “failing to invest investors’ funds as promised; and secretly misappropriating at least $4 million of CanaFarma funds for their own benefit.”
Palatnik, 49, is from Morganville, New Jersey; Fargesen, 54, is from Manalapan, New Jersey, according to a press release from the U.S. Attorney’s Office, Southern District of New York.
Palatnik, who received his sentence last week, pled guilty to securities fraud conspiracy and wire fraud conspiracy in October. He was sentenced to 6½ years in prison and three years of supervised release, and ordered to pay $1.7 million in restitution. Fargesen, who also entered a guilty plea, is scheduled to be sentenced Jan. 30.
Two other defendants, Frank Barone and Kirill Chumenko, senior vice presidents of sales and marketing at CanaFarma, were charged separately in 2021, and in an amended filing entered in November 2023. They have been barred from serving as an officer or director of a public company and from participating in penny stock offerings, but have not yet been sentenced.
CanaFarma, which also has offices in New York, sells CBD and other hemp-based products, such as chewing gum and tinctures, under the YOOFORIC brand. Trading in the company’s shares on the Canadian Securities Exchange appears to have been halted shortly after the company officials were arrested in Autumn 2021.
In sentencing Palatnik, prosecutors said he lied to investors to raise millions of dollars to start “the first farm-to-table CBD company,” but that he and co-conspirators used the money to manipulate CanaFarma’s stock price, and for personal purposes.
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