Fake Cannabis Billionaire Pleads Guilty to Fraud
Law enforcement and the court system continues to crack down on illegal cannabis operations as the legal adult-use cannabis provides users a safe, controlled way to use marijuana. Perhaps no story about illegal cannabis operations is as strange as the one about the fake cannabis billionaire caught in southern California.
When police caught up to the fake cannabis billionaire, Justin Costello, he was hiking through a remote area of southern California. He had $70,000 in U.S. and Mexican cash, a fake Mexican ID, and gold bars in a backpack. Apparently, Costello had decided to make a run into Mexico, authorities told UPI. Since his arrest, Costello, 42, has pled guilty to securities fraud.
It’s another cautionary tale about why cannabis consumers and investors should ensure they are associating with people and businesses working within the parameters of the legal cannabis products marketplace.
Lying About Education, Wealth and His Business
In the years before an FBI SWAT team caught up to him, Costello kept busy telling many different falsehoods on a wide variety of topics, according to UPI, CNBC and other news agencies.
Those include acting as a fake cannabis billionaire and posing as a twice-wounded Special Forces Iraq veteran. He also claimed he graduated from the University of Minnesota and had a master’s degree in business from Harvard University. He also told potential investors in his company that he had spent 14 years on Wall Street and managed money for wealth investors.
In addition to those falsehoods, Costello also allegedly misused investors’ money. Some of it went to uses far removed from the cannabis business. For example, Costello used about $42,000 of his investors’ money to pay for his wedding. According to CNBC, the wedding included a cake and an ice sculpture that featured the James Bond 007 logo.
Owes Investors $35 Million
The plea agreement signed by Costello says he lied about his qualifications from July 2019 through May 2021, according to CNBC and UPI. During that time, more than 7,500 investors bought and sold stock in his publicly traded company called GRN Holding Corp. Those investors collectively lost about $25 million during that time period.
Investors collectively lost about $6 million through another Costello company, Hempstract. Also, through a third company, Pacific Banking Corp., Costello fraudulently diverted $3.7 million given to the company by three marijuana businesses that paid him for banking services, according to the plea agreement quoted by multiple news agencies.
Finally, Costello also made about $625,000 through buying large blocks of stocks in companies and then paying another person to promote the companies on Twitter, encouraging more people to buy and boost the stock price. Costello would then sell at a profit in what is known as a “pump and dump” scheme.
Costello now faces up to 10 years in prison and must repay his investors a total of $35 million, according to CNBC and UPI.