A Beverly-primarily based investment adviser is facing charges soon after he allegedly solicited millions of dollars in investments for health-related marijuana projects and dispensaries that under no circumstances received licenses from the state.
Frederick V. McDonald Jr., the CEO of US Advisory Group Inc., allegedly funded a number of ventures with investments from a lot more than 100 folks, which includes “one higher net-worth client, who has lost a lot more than $three million,” according to Secretary of State William F. Galvin, whose Securities Division charged McDonald on Wednesday.
Altogether, Galvin’s workplace stated, investors have “lost handle of a lot more than $eight million in assets, even though seeing no returns on their investments.”
According to the complaint, the unidentified higher net-worth investor became 1 of McDonald’s clientele in 2007. McDonald reportedly suggested the client invest in marijuana providers nationwide, providing “only the barest of data,” the complaint says.
He started discussing Massachusetts marijuana dispensaries with the client in December 2013. In early 2014, according to the complaint, McDonald and numerous other folks started operating collectively to get licenses to open 3 health-related marijuana dispensaries in Massachusetts.
They reportedly wanted to open a dispensary in Revere at 1 point, but “a lack of transparency and communication led to funding challenges,” according to Galvin’s workplace.
McDonald and his partners also allegedly purposely hid the identity of a fund-raiser for the project mainly because of the person’s criminal record, which could have kept them from getting a license.
Galvin’s workplace stated that even though investing his clients’ funds into the ventures, McDonald did not reveal his conflict of interests in the projects or “disclose essential threat variables in the cannabis sector.”
“McDonald failed to educate himself concerning the distinctive and complicated licensing procedure in Massachusetts, which resulted in the distribution of supplying documents that failed to adequately disclose to investors the dangers or troubles the investment could face,” the complaint says.
McDonald’s many providers — US Advisory Group, Commonwealth Discomfort Management Connections LLC, and Kettle Black of MA LLC — are named in the complaint.
Galvin’s workplace stated it is searching for a range of issues, which includes a fine, an order that would permanently bar McDonald from registering in the state, and a “requirement that respondents make delivers of rescission and deliver restitution to compensate investors for the alleged wrongdoing.”
“McDonald’s no cost-wheeling practices incorporated cutting corners at each chance and lying to his personal company partners and investors to cover his personal errors,” the complaint states.
McDonald could not instantly be reached for comment.