SEC Alleges Ponzi Scheme at Cannabis Co. in New Complaint

On Tuesday, the Securities and Exchange Commission filed a complaint in the Central District of California against David Bunevacz, Mary Hayca Bunevacz, Caesarbrutus LLC, CB Holding Group Corp. and Brutus California Ventures Corp. alleging securities fraud and a Ponzi scheme. 

According to the complaint, David Bunevacz is a resident of Calabasas, California and was the president and owner of the defendant companies, based in Wyoming and Nevada. Further, the complaint states that on March 22, 2017, David pleaded guilty to two felony counts of selling securities without qualification in California state court. 

The complaint also states that Mary H. Bunevacz is also a resident of Calabasas and is David’s step-daughter. She allegedly held executive-level titles with Caesarbrutus and CB Holding. Additionally, the complaint states that Brutus California Ventures Corp. is a California Corporation registered by Mary. 

The SEC purports that from at least April 2017 until at least September 2019, David Bunevacz, Caesarbrutus and CB Holding raised over $32 million from at least 40 investors who were informed that the defendants were engaged in the production and sale of cannabis products, particularly vape pens. 

However, the complaint alleges that Caesarbrutus and CB Holding were “sham businesses,” and David misappropriated the vast majority of those funds for personal expenses and to make “Ponzi Payments” to investors for previously issued securities. Further, the complaint states that David lied to investors about his professional experience and connections in the cannabis industry and failed to disclose his March 2017 conviction of two felony securities violations under California law. As a result of the defendants’ misappropriation and fraud, investors faced a significant loss, the agency alleged. 

Therefore, the SEC is alleging fraud in connection with the purchase and sale of securities in Violation of Section 10(b) of the Exchange Act and Rule 10b-5 and fraud in the offer or sale of securities in violation of Sections 17(a) of the Securities Act against David Bunevacz, Caesarbrutus and CB Holding and the unregistered offer and sale of securities in Violation of Sections 5(a) and 5(c) of the Securities Act against all defendants. The SEC seeks declaratory and injunctive relief, disgorgement of all funds received in the illegal conduct and the payment of civil penalties under the Securities and Exchange Act.