This Cannabis REIT Giant Faces Accusations Of Forgery And Running A Ponzi Scheme

Franco DeBlasio, on behalf of Gerich Melenth Nin LP, filed a derivative complaint for the benefit of Innovative Industrial Properties, Inc. IIPR, against certain members of its board of directors and certain of its executive officers, seeking to remedy defendants’ breaches of fiduciary duties, reported Green Market Report.

This lawsuit is one od several the company has faced since April 2022, the last of was in March 2023 by investor Ross Weintraub.

The plaintiffs allege that IIPR violated Maryland law by not investigating previous claims and that the company’s directors neglected to properly vet two of its largest tenants, Kings Garden and Parallel, resulting in financial losses.

”Both tenants were mired in scandal, facing multiple lawsuits alleging fraudulent conduct, including misrepresenting their financial condition to lenders and investors,” the lawsuit states.

In April 2022, Blue Orca Capital released a report alleging that Kings Garden and Parallel would soon default on their rental obligations and that IIPR failed to conduct adequate due diligence into these entities prior to entering into sale-leaseback transactions. On this news, the IIPR’s stock price fell 7.5%.

The company issued a response, calling the report “flawed.” But a retroactive review of the $48 million reimbursements to Kings Garden showed that the requests did not match the supporting documentation but were forged.

The plaintiffs request to be awarded to the company in the amount of damages sustained as a result of the defendants’ breaches of fiduciary duties, waste of corporate assets and unjust enrichment. The lawsuit also asks the company to improve its corporate governance and internal procedures to ensure compliance with the law.

Read more on Green Market Report.

Photo: Benzinga edit with photos by jarmoluk and lindsayfox on Pixabay