A federal judge approved a temporary freeze on a portion of the profits the Securities and Exchange Commission says a Denver businessman made while promoting a marijuana penny stock.
In a decision last week, Judge Marcia Krieger ordered the freeze on $3.1 million resulting from Jeffrey Friedland’s 2017 sale of shares of Israeli cannabis company OWC Pharmaceutical Research Corp.
The SEC sued Friedland for fraud last week, alleging he failed to disclose in promotional emails and media appearances that he was compensated to promote the stock. It also requested a freeze on the $6.5 million Friedland made when he sold his shares in March 2017.
Krieger ordered the freeze on less than half that figure, in part because the shares Friedland received as compensation were technically held, and sold, by several companies the SEC says he controlled: Global Corporate Strategies, Intiva Pharma and Lane 6552 LLC.
Krieger wrote in her decision that an asset freeze requires the SEC to show it is “likely to succeed” in its case against a defendant, and that the agency had not met that standard regarding the assets held by Global Corporate Strategies.
Additionally, the SEC alleged in its lawsuit that Friedman and his wife used some of the money made from selling shares to buy a house in Snowmass and a condo in Denver. Krieger said the court wasn’t freezing those assets or allowing the SEC to file a lien against the properties because the agency had failed to show that Friedland or his wife had the title to them.
A hearing is scheduled for March 26 to determine whether the assets will remain frozen beyond March 30.