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Ultra Health Sues Claiming Violation of Its 1st Amendment Rights

Santafe New Mexican:  “A state-licensed medical marijuana producer is suing EXPO New Mexico officials, saying restrictions on what the company would be allowed to display in an informational booth during the annual state fair in Albuquerque violate free speech laws.  New Mexico Top Organics-Ultra Health says in a complaint filed this week in U.S. District Court that the rules are so strict the company couldn’t even display its logo, which features a stylized image of a marijuana leaf, and would moot the purpose of having an informational booth at the fair. . . . Ultra Health President Duke Rodriguez said his company had permission to display the nonflowering seedling”

 

By |2017-06-04T07:34:55-07:00June 4th, 2017|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health Sues Claiming Violation of Its 1st Amendment Rights
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Feds Warn Duke Rodriguez Not to Have Pot at Nevada Pot Festival

NM Political Report:  “A letter from the U.S. Department of Justice to organizers of a cannabis festival in Nevada could signal how the Trump administration plans to enforce marijuana laws.  Nevada’s U.S. District Attorney sent a letter last week to Duke Rodriguez, CEO of the New Mexico and Arizona based Ultra Health, with concerns that cannabis will be present at the High Times Cannabis Cup. . . . Bogden also addresses Obama-era guidance from the Department of Justice to U.S. district attorneys. In 2013 Deputy Attorney General James Cole issued a memo stating the Department of Justice would not prioritize arrests for possession of small amounts or use of cannabis. . . . ‘The memoranda are not laws or regulations, and they do not create any rights that may be relied upon by any person,’ Bogden wrote. ‘Marijuana remains illegal under federal law’.”

“

By |2017-03-03T04:44:51-07:00March 3rd, 2017|Federal Dispensary Attacks, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Feds Warn Duke Rodriguez Not to Have Pot at Nevada Pot Festival
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Ultra Health Fined by New Mexico Health Department

Albuquerque Journal:  “When a three-week-old medical marijuana seedling named Dorothy made her public debut at the New Mexico State Fair in September, state officials scrambled to pull the plug on her appearance.  Now the New Mexico medical cannabis company that sponsored Dorothy’s field trip is facing state sanctions that could cost the company more than $100,000, said Duke Rodriguez, owner and CEO of Ultra Health LLC, one of the state’s 35 licensed medical cannabis producers.”

By |2016-11-06T08:16:54-07:00November 5th, 2016|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health Fined by New Mexico Health Department
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Ultra Health Denied Balloon Fiesta Sponsorship

Albuquerque Business First:  “Ultra Health, a regional medical cannabis company with six locations in New Mexico, has been denied a sponsorship at the Albuquerque International Balloon Fiesta this year.  ‘We didn’t fit the profile of what they wanted in balloon sponsorship,’ Duke Rodriguez, CEO and president of Ultra Health, told Business First. “They didn’t feel it’s appropriate for a family-style event.”

By |2016-06-23T19:19:40-07:00June 20th, 2016|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health Denied Balloon Fiesta Sponsorship
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Duke Rodriguez + Ultra Health + Nevada’s Paiute Tribe + Pot = ?

Albuquerque Journal:  “A New Mexico medical cannabis producer this week announced a joint venture with the Las Vegas Paiute tribe to build a large growing facility and two dispensaries on tribal land in Nevada.  Duke Rodriguez, founder of Ultra Health LLC, said the $5 million project could serve as a model for a similar deal in coming months with a pueblo in New Mexico.”

See the tribe’s press release.

See also “Las Vegas Paiutes’ newest venture: medical marijuana” that said, “Ultra Health is working with more than 20 tribes, some of whom have signed letters of intent pending completion of the regulatory process, Rodriguez said.”

By |2016-03-01T19:20:51-07:00March 1st, 2016|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Duke Rodriguez + Ultra Health + Nevada’s Paiute Tribe + Pot = ?
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Oops! New Mexico Girl Scouts Mistakenly Sell Outside a Marijuana Dispensary

KRQE News: “The communications director for the Girl Scouts of New Mexico Trails, identified as Carol Ann Short, emailed News 13 saying that selling outside medical marijuana dispensaries is against scout rules.  Short points to the 2016 Troop manual, which includes the following provision:

Booth locations are NEVER allowed at liquor stores, smoke shops, or medical dispensaries

Two local Girl Scouts set up shop at a unique location in Albuquerque on Saturday.  It’s that time of year — Girl Scout cookie season. The young ladies are back at it, enticing cookie-craving customers to hand over a few bucks a box.  Abby Sargent, a Junior Girl Scout, and Mary Jane Temer, a Brownie, sold their cookies outside Ultra Health, a medical marijuana dispensary on Menaul, on Saturday afternoon.”

By |2019-06-18T19:55:54-07:00February 27th, 2016|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Oops! New Mexico Girl Scouts Mistakenly Sell Outside a Marijuana Dispensary
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Duke Rodriguez New Mexico Marijuana Guru

The Albuquerque Journal wrote two stories about medical marijuana in New Mexico and former Arizona medical marijuana bad boy Duke Rodriguez.  The stories are:

Here are some quotes from the first story:

“Duke Rodriguez, the principal of Ultra Health, also expresses pride in the facility, where he grows 450 marijuana plants at a time, the maximum allowed under state Department of Health regulations.  But Ultra Health is not one of the state’s 35 licensed nonprofit producers authorized by the New Mexico Department of Health to grow and sell medical marijuana. . . . Ultra Health is unusual, if not unique, among the state’s marijuana producers in that it is not a New Mexico-based entity. Ultra Health is a limited liability corporation based in Scottsdale, Arizona”

Quotes from the second story:

“Duke Rodriguez, principal of Ultra Health LLC, first became involved in the medical cannabis industry around 2013 in Arizona.  He purchased the 11-acre marijuana-growing facility in Bernalillo in August 2014 on behalf of an Arizona corporation called Zoned Properties Inc. . . .

Ultra Health became the sole owner of the Bernalillo property as a result of a settlement reached in a lawsuit filed last year.

In March 2015, Zoned Properties filed suit in Arizona Superior Court against Rodriguez and Ultra Health in a dispute over business interests in Gilbert, Ariz., according to public records filed by the company.

In a settlement reached in July, Zoned Properties transferred ownership of the $2.7 million Bernalillo property to Rodriguez and Ultra Health, a company disclosure statement said.

Under the settlement, Rodriguez transferred ownership of a 48-acre property and growing facility in Chino Valley, Ariz., to Zoned Properties. Rodriguez also relinquished his ownership stake in Zoned Properties.

See “Zoned Properties, Inc. & Duke Rodriguez Lawsuits.”

Zoned Properties, Inc., published a quarterly consolidated financial statement for the nine months ending 1, 2015 that sheds light on Duke’s statements about his settlement with Zoned Properties, Inc.

On January 29, 2014, the Company entered into a purchase and consulting agreement (the “Ultra Agreement”) with Ultra Health, LLC., a related party due to common ownership and investments made by beneficial stockholders of the Company (“Ultra Health”), pursuant to which the Company was to acquire a 1,536 square foot modular building to be delivered and erected on the purchased land for total cash payments of $675,000. Subsequent to the purchase of this land and building, these real estate assets were transferred to Gilbert Property, LLC, a wholly-owned subsidiary of the Company. In connection with the 1,536 square foot modular building discussed above, on April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied, in purchasing the land upon which that building was to be constructed, which the Defendants failed to perform. The Company reviews it rental properties for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Based on this review, on December 31, 2014, the Company determined that the Gilbert building carrying value of $675,000 was not recoverable and recorded an impairment loss – related party of $675,000.  On July 9, 2015 and effective August 1, 2015, the Company entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases. . . .

Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC On April 10, 2015, the Company became a party to a certain case pending in the Superior Court of the State of Arizona in and for Maricopa County, Arizona styled, Zoned Properties, Inc. v. Duke Rodriguez, Ultra Health, LLC and Cumbre Investment, LLC (“The Defendants”), Case No. CV-2015-004225, wherein the Company alleges, among other things, that the Defendants, alone or in collusion with one another, breached a certain contract for the construction of the Gilbert building, and had made material misrepresentations or had negligently misrepresented certain material elements upon which the Company relied in purchasing the land upon which that building was to be constructed, which the Defendants failed to deliver (See Note 3). On June 8, 2015, the Company filed a motion to dismiss the counterclaim. The motion to dismiss has been fully-briefed and was set for oral argument on August 7, 2015. On July 9, 2015 and effective August 1, 2015, the Company entered into a settlement agreement with the Defendants that, among other things, settles the pending claims and grants mutual general releases. Under the terms of the settlement:

1. On August 1, 2015, the Company transferred title to its Bernalillo, New Mexico property to Defendants. At June 30, 2015 and December 31, 2014, the carrying value of this property was $2,719,658 and $2,737,863, respectively. In connection with such property, the Company forfeited quarterly straight-lined rental revenue of approximately of $287,000 through September 2024. For the six months ended June 30, 2015, rental revenues from this property amounted to $120,000. The Company did not have rental revenue from this property in the comparable 2014 periods.

2. The Defendants returned 2,496,054 shares of common stock to the Company and the Company cancelled such shares. On the Settlement Date, such shares were valued at $1,406,603 or $0.5635 per common share which represents the cost of the treasury shares purchased and retired.

3. The Defendants effectuated the transfer of four parcels of property in Chino Valley, Arizona to the Company which consists of approximately 48 Acres of land and the Company acquired an additional parcel in Chino Valley for $200,000 in cash. Based on an independent appraisal, on the Settlement Date, the fair value of property obtained, consisting of land, buildings and improvements, amounted to approximately $1,528,000.

4. The Company shall obtain water rights associated with property in Chino Valley, Arizona.

In connection with the settlement, on the Settlement Date, the Company did not record any settlement gain or loss.

 Zone Properties’ financial statement contains some interesting line items for a publicly traded company:

  • $297,695 revenue excluding revenue from related parties
  • $1,011,008 professional fees
  • $(976,579) loss from operations
  • $(1,145,170) net loss
By |2017-02-04T07:38:56-07:00February 15th, 2016|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Duke Rodriguez New Mexico Marijuana Guru
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Zoned Properties, Inc., Sues Duke Rodriguez for Fraud

On April 10, 2015, Zoned Properties, Inc., filed a lawsuit against Duke Rodriguez, Ultra Health, LLC, and Cumbre Investment, LLC.  These parties apparently like to litigate.  Since 2011 Duke has been a litigant in seven lawsuits filed in Maricopa County Superior Court.  This is the fifth time since March 5, 2014, that Zoned Properties, Inc., has been a party to a lawsuit filed in Maricopa County Superior Court.

Cumbre Investment, LLC, owned by Duke Rodriguez, is a major stockholder (12.18%) of Zoned Properties.  The Complaint contains a fraud count and the following allegations (paragraph numbers correspond to the paragraph numbers in the Complaint):

9.  This lawsuit concerns Defendants’ collective failure to deliver to Zoned Properties a 1,536 square foot modular building (the “Building”) that was to be built and permanently installed on vacant land located at 988 S. 182nd Place, Gilbert, Arizona 85296 (the “Property”) for use as a licensed medical marijuana dispensary.

15.  In or around January 2014, Rodriguez verbally represented to Zoned Properties, individually and on behalf of Ultra Health and Cumbre, that if Zoned Properties purchased the Property, Rodriguez, individually and on behalf of Ultra Health and Cumbre, would ensure that the Building would be sold to Zoned Properties, that the Building would be built and installed on the Property, and that the requisite authorizations to operate the Building as a licensed medical marijuana dispensary had been obtained.

21. . . . Ultra Health purportedly sold the Building to Zoned Properties for $675,000 – the same Building that cost $135,566.50.

24. In exchange for the consulting fee, Ultra Health agreed to “ensure the dispensary received its authorization to operate prior to August 6, 2014 pursuant to the terms and guidelines under the Arizona Medical Marijuana Act for the Gilbert E CHAA (the ‘Project’).”

27.  From February 2014 until November 2014, Rodriguez, in his individual capacity and on behalf of Ultra Health and Cumbre, repeatedly made verbal representations to Bryan McLaren, Chief Executive Officer of Zoned Properties (“McLaren”), that the Building was being constructed, that the installation of the Building was imminent, and that Rodriguez already had obtained the requisite authorizations to operate the Building as a licensed medical marijuana dispensary.

28.  In an article published by The Arizona Republic on June 20, 2014, Rodriguez is quoted as saying that “his company” had invested more than $1 million into developing the anticipated dispensary in Gilbert, and that the Building was “nearly complete and could be opened before the end of the year.”

31. . . . Pac-Van never constructed the Building and Cumbre never took ownership of the Building.

32.  Since Cumbre never took ownership of the Building, it had no ownership rights in the Building

34. . . . Ultra Health did not own the Building, or have any ownership interest in the Building, at the time that it purportedly sold the Building to Zoned Properties

35.  The Building still has not been constructed and the Property remains vacant.

36.  In sum, Rodriguez orchestrated a series of straw transactions that culminated with the purported sale to Zoned Properties of a Building that neither Cumbre nor Ultra Health has ever owned and that has never existed, for a grossly inflated price.

Duke Rodriguez & Cumbre Investment, LLC, Ask Gilbert for Special Use Permit

Zoned Properties’ Complaint contains a fraud count against Duke Rodriguez.  The text below might help Zoned Properties prove its case.

On June 4, 2014, Duke Rodriguez and Jeffrey Kaufman, as attorney for Zoned Properties, Inc., spoke to the Gilbert, Arizona, Planning Commission in an attempt to convince the Planning Commission not to revoke a conditional use permit issued by the Planning Commission to Ultra Health, LLC, to operate a medical marijuana dispensary at the Property.  The Minutes of the Meeting contain the following statements (references are to the speaker and the page number of the Minutes where the statement is located):

the Town was concerned whether the applicant supplied a valid dispensary registration certificate as required by code and the conditions of approval of the Use Permit. . . . Ms. Lorbeer said that she had handed out a response that staff received from the state showing that the certificate supplied by the applicant, Duke Rodriguez, to town staff on April 10, 2014 is not recognized by the state as valid  Catherine Lorbeer, Town of Gilbert Zoning Administrator, Minutes page 21.

Mr. Kaufman stated that he represents Zone Properties which purchased the piece of property at issue . . . . Zone Properties entered into a partnership agreement with Ultra Health which is Duke Rodriguez’s company to participate in this venture and Mr. Rodriguez’s company has a contract with East Valley Patient Wellness Group. . . . Mr. Rodriguez’s company has a contract with East Valley Patient Wellness Group.  Jeffrey Kaufman, Minutes page 22.

he was the original applicant. . . . the facility is being built and $1 million has been invested. Duke Rodriguez, Minutes, page 23.

If you look in the original application for UP13-07, it was the applicant as being Duke Rodriguez and the company being Cumbree Investments. It also says that the applicant has the dispensary registration certificate for CHAA 77 in east Gilbert. . . . In the application, it says that Duke Rodriguez is the applicant and it also says that the applicant has the dispensary registration certificate for CHAA 77.  Dane Nielsen,  Minutes, page 23.

The town granted UP13-07 on the belief that the applicants were the holder of the registration certificate which was not true as provided by Arizona Department of Health Services. Arizona Department of Health Services also confirmed that the applicant provided a copy of a dispensary registration certificate that had a DBA that mentioned one of their entities, Ultra Health, but the Arizona Department of Health Services has returned that and marked it void.  Dane Nielsen, Minutes, page 23.

In March 2013 they met with a couple of agents with Stone Pass Realty. They referred the Sanchez’s to Duke Rodriguez to help them find a suitable location in Gilbert. When he found the location in question unbeknownst to the Sanchez’s he placed it in his own LLC. . . . Mr. Sanchez stated again that no contract was ever signed with any of them.  David Sanchez, Minutes, page 24.

Patricia Haugland, Gilbert Arizona, came forward. Ms. Haugland said that she was the owner of Stone Pass Real Estate and Dave and Kathy Sanchez did come to her office and asked if her company would be able to assist in locating a piece of property in the Town of Gilbert for the CHAA that they had the license for. At that time she and Duke Rodriguez had worked for the firm approximately 30 days and she in turn referred the Sanchez’s to Mr. Rodriguez to represent them solely as a real estate agent. What then occurred was that Mr. Rodriguez met with Dave and Kathy Sanchez, got information about their business and about the medical marijuana industry and then went and locked up the real estate that was available in the town knowing that there was no other real estate in town for the Sanchez’s to get approved by the city. After that occurred and Ms. Haugland found out all the information about what she believed to be fraudulent activity on the part of an agent that worked for her firm she immediately terminated Mr. Rodriguez’s license. Ms. Haugland said that she wanted everyone to understand what her position was in terms of how she saw it unfold as an owner and broker of the company and watching his activities as it is at a minimum unethical.  Patricia Haugland, Minutes, page 25.

Cumbree is the development company who agreed to develop the site.  Duke Rodriguez, Minutes, page 25.

Commissioner Cavenee asked Mr. Rodriguez if he had an executed contract giving him the right to use this license . . . . Commissioner Cavenee said that was not his question. His question was did he have a contract to use this license. Mr. Rodriguez said that he does have a contract.Commissioner Cavenee asked why he did not present that contract, wouldn’t that have been crucial. . . . Commissioner Cavenee said that it seems to him that the crux of the matter is who has the right to utilize this licenseand represent the Use Permit, and proof of that relationship would have been crucial. That seems obvious.  Commissioner Cavenee, Minutes, page 26.

Mr. Rodriguez said that this was not the only license that they have done like this. They have done this in other communities. This is how it works in Clifton; this is how it works in Safford.  Duke Rodriguez, Minutes, page 26.  Author’s Comment:  Neither Duke nor any of his affiliated entities got a dispensary in Clifton or Safford, but his company did enter into a lease for real property with the City of Clifton that provided that the tenant would operate a medical marijuana dispensary in the premises.

When he was then asked to supply the proof to staff because it is a condition of the approval and a requirement of the code, he provided one which is not valid.  Ms. Lorbeer, Minutes, page 28.  See Dispensary Certificate.

See the relevant documents attached to the Minutes:

  • April 25, 2014, letter from the Arizona Department of Health Services to Kathy Sanchez that states “Further, ADHS recognizes East Valley Patient Wellness Group, LLC, as the current and sole holder of the DRC for Community Health Analysis Area (CHAA) 77 ADHS can confirm that it does not recognize Cumbre Investments, LLC, Ultra Health, LLC, or any other entity as a holder of the DRC for CHAA 77.”
  • March , 2014, letter from the Arizona Department of Health Services to Kathy Sanchez that states “AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.”

To learn more about the litigious Zoned Properties read:

By |2019-06-14T08:27:52-07:00April 18th, 2015|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Zoned Properties, Inc., Sues Duke Rodriguez for Fraud
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Zoned Properties’ Major Stockholders in Court Fight over Money & Control of Two Dispensaries

Take the following ingredients, stir the pot and you have a recipe for a big-time lawsuit:

  • $12,000,000 allegedly invested in or on behalf of Ultra Health, LLC, an Arizona LLC owned by Duke Rodriguez (51% membership interest + 40% of profits) and CA2 Capital, LLC (49% membership interest + 60% of profits).  CA2 Capital, LLC, is owned by Alan Abrams and Christopher Carra.
  • A fight for control of two Arizona medical marijuana dispensaries called Broken Arrow Herbal Center, Inc. and CJK, Inc. These non-profit corporations have dispensary registration certificates for Sahuarita (Ultra Health Green Valley) and Kingman (Ultra Health Kingman), respectively.
  • Disagreements among three major shareholders of Zoned Properties, Inc., a publicly traded company.  Zoned Properties, Inc., claims in its March 31, 2015, disclosure statement that it “focuses on properties within the medical marijuana industry.”  Zoned Properties’ major shareholders as of March 31, 2015, include Duke Rodriguez’ company Cumbre Investment, LLC, (2,251,552 shares – 12.18%), Alan Abrams (3,526,669 shares – 19.08%) and Christopher Carra (2,043,335 shares – 11.06%).

The lawsuit filed in Maricopa County Superior Court on March 26, 2015, is CA2 Capital, LLC; Alan B. Abrams; Broken Arrow Herbal Center, Inc.; & CJK, Inc.;  vs. Duke Rodriguez, a/k/a Rueben Duke Montenegro Rodriguez; Stormwind Group, LLC; Cumbre Investment, LLC; CVUH, LLC; & Sold By Group, LLC.  The litigation is a fight over money and control of two Arizona medical marijuana dispensaries and Ultra Health, LLC.  Alan Abrams seeks court approval of his attempt to remove Duke Rodriguez as a manager of Ultra Health and a director and officer of Broken Arrow and CJK.

This is the sixth seventh (Duke was sued again after this case was filed) time since 2011 that Duke Rodriguez, Arizona’s would-be medical marijuana czar, has been a party in a Maricopa County Superior Court lawsuit.  The lawsuits are CV2011-095146, CV2013-055265, CV2014-003047, CV2014-005642, CV2014-007302, CV2015-003778 and CV2015-004225.  To learn about the seventh Duke Rodriguez lawsuit read “Zoned Properties, Inc., Sues Duke Rodriguez for Fraud.”

Summary of the Complaint

For those of you who don’t have the time to read the juicy allegations in the Complaint that are quoted below, here’s a short summary of the plaintiffs’ allegations:

  • CA2 Capital, LLC, invested $12 million in Ultra Health, LLC or on its behalf.
  • On information and belief, Rodriquez did not have substantial personal assets in the Summer of 2013.
  • Ultra Health, LLC, distributed a Prospectus that falsely claimed Ultra Health possessed three Arizona medical marijuana dispensary certificates.
  • Rodriguez made reassuring but false representations to Abrams at that time that Ultra Health could still obtain those three dispensary registration certificates through litigation with the non-profit companies which had actually been awarded the three certificates.
  • Abrams’ funds were indeed used to pay for litigation with the control persons of the non-profits which held the three dispensary registration certificates which Rodriguez had represented had been “awarded” to Ultra Health, funded the acquisition of control and management rights for two additional non-profit companies awarded dispensary registration certificates, and funded the acquisition of a large medical marijuana cultivation facility in Chino Valley, Arizona.  See “Ultra Health, LLC Sued Again: Now in 4 Lawsuits.”

Here are the court documents filed in the case as of April 1, 2015:

Plaintiffs’ Documents

Defendants’ Documents

Public Company Zoned Properties, Inc.

Alan Abrams, Christopher Carra and Cumbre Investments, LLC, (owned by Duke Rodriguez) are all shareholders of Zoned Properties, Inc., a publicly traded corporation (symbol ZDPYD) that claims to “focus on properties in the medical marijuana industry.”  See page 8 of ZPI’s April 15, 2014, Company Information & Disclosure Statement.  In 2014, Zoned Properties, Inc., was involved in three property purchase transactions with Ultra Health, LLC according to Note 3 of its 2014 annual report issued on March 31, 2015.  To learn more about Zoned Properties, Inc., read “Zoned Properties, Inc. Public Disclosures.”

Zoned Properties, Inc., had a market value of $926,315,200 on April 1, 2015, despite  a 2014, year end financial statement that disclosed:

  • $439,887         total revenue
  • ($1,483,840)   loss from operations
  • ($1,744,258)   net loss
  • $7,240,885      stockholder’s equity
  • $10,492,616    total assets

Zoned Properties, Inc.’s Total Cash Flow From Operating Activities for the years 2011 – 2014 was -$1,184,000.  Its total revenue for the same four year period was $439,887.

Adversaries Alan Abrams and Duke Rodriguez Acquire Control of Two Arizona Medical Marijuana Dispensaries

Broken Arrow Herbal Center, Inc. and CJK, Inc. are Arizona non-profit corporations that have licenses to operate Arizona medical marijuana dispensaries.  Alan Abrams and Duke Rodriguez gained control of these two corporations in 2014.  AZDHS regulation  R9-17-306.A states: “A dispensary may not transfer or assign the dispensary registration certificate.” Does change of control constitute a transfer of the dispensary license?

Duke Rodriguez claims that Alan Abrams was a founding stockholder of Zoned Properties, Inc.  See Exhibit 1 – Declaration of Duke Rodriguez.  As of March 31, 2015, Zoned Properties’ major stockholders were Alan Abrams (19.08%),  Christopher Carra (11.06%) and Cumbre Investment, LLC (12.18%), which is owned by Duke. What is the relationship, if any, between Zoned Properties, Inc., and the two dispensaries now controlled by major stockholders of Zoned Properties, Inc.?

The Players

Here’s a score card to help keep track of the players in this lawsuit:

Plaintiff Entities

  • CA2 Capital, LLC, is an Arizona limited liability company owned by Alan B. Abrams and Christopher Carra.
  • Broken Arrow Herbal Center, Inc., is an Arizona nonprofit corporation whose directors prior to March 26, 2015, were Duke Rodriguez, Alan Abrams and Bryan W. Hill.  Duke Rodriguez was the President before March 26, 2015.  This corporation owns and operates an Arizona medical marijuana dispensary in Sahuarita, Arizona, that leases its dispensary premises at 1732 W. Commerce Point Place, Sahuarita, AZ, from Green Valley Group, LLC, an LLC that is 100% owned by Zoned Properties, Inc.
  • CJK, Inc., is an Arizona nonprofit corporation whose directors prior to March 26, 2015, were Duke Rodriguez and Alan Abrams.  Duke Rodriguez was the President before March 26, 2015.  This corporation owns and operates an Arizona medical marijuana dispensary in Kingman, Arizona, that leases its dispensary premises at 2095 Northern Ave., Kingman, AZ, from Kingman Property Group, LLC, an LLC that is 100% owned by Zoned Properties, Inc.
  • MAC CAM, LLC, an Arizona limited liability company whose members are Alan Abrams, Christopher Carra and Marc Brannigan (former President and former majority stockholder of Zoned Properties, Inc.    As of April 15, 2014, MAC CAM, LLC, owned 700,000 shares of preferred stock, but its shares apparently have been redeemed.

Defendant Entities

  • Stormwind Group, LLC, is an Arizona limited liability company owned by Duke Rodriguez.
  • Cumbre Investment, LLC is an Arizona limited liability company owned by Duke Rodriguez.
  • CVUH, LLC, is an Arizona limited liability company owned by Ultra Health, LLC, and managed by Duke Rodriguez.
  • Sold By Group, LLC, is an Arizona limited liability company owned and managed by Duke Rodriguez.

Allegations Stated in the Complaint

Here are some of the more interesting allegations made in the 45 page Complaint (paragraph numbers are the paragraph numbers in the Complaint):

1.  Plaintiff CA2 Capital, LLC . . . (“CA2”) . . . has provided and . . . nearly $12,000,000.00 . . . in financing for an entity known as Ultra Health, LLC, . . . (“Ultra Health”).

5.  Defendant Duke Rodriguez . . .

[is] the former Manager of Ultra Health, who has been removed as Manager of Ultra Health and is succeeded in that role by the current Manager of Ultra Health, plaintiff Alan B. Abrams.

14.  Plaintiffs have invested nearly $12,000,000.00 . . . in Ultra Health or on its behalf, by directly financing and arranging for financing which has occurred in that amount to date, essentially all of the funding by, for and behalf of that entity.

35.  On information and belief, Rodriquez did not have substantial personal assets in the Summer of 2013.

39.  In the Summer of 2013, Rodriguez caused to be produced and distributed a written investment prospectus which he used to solicit investment in Ultra Health (the “Ultra Health Prospectus“), entitled “Financial and Market Analysis & Recommendations on Entering the Arizona Medical Marijuana Market”.

41.  The Ultra Health Prospectus contained numerous false and misleading statements.

42. Ultra Health, LLC (UH) was awarded three dispensary certificates: Duncan/Morenci (No. 83), Graham County (no. 84), and Gilbert E (No. 77). With these certificates, UH has the right to acquire, possess, cultivate, manufacture, deliver, transfer, supply, sell, and dispense medical marijuana to qualifying patients and designated caregivers.

44.  Ultra Health was, in fact, “awarded” zero dispensary registration certificates.

Author’s Comment:  This allegation states a fact.  See “Arizona Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary.”  See also the letter from the Arizona Department of Health Services, submitted to the judge on March 14, 2014, that contains the statement “AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.”

47.  The Ultra Health Prospectus also represented . . . that Ultra Health “has made a capital call of $300,000 to its partners to be used as start-up capital.” Ultra Health Prospectus, p. 23.

49.  The statement which Rodriguez caused to be made in the Ultra Health Prospectus that a $300,000 capital call has been “made” on Ultra Health’s “partners” was false, on information and belief.

51.  Rodriguez provided the Ultra Health Prospectus to Abrams and Christopher Carra as part of an investment presentation he made to them, and which he referenced in numerous related discussions in which he repeatedly but falsely represented to Abrams and Carra that Ultra Health “was awarded three dispensary certificates“.

52.  As a result of the false representations Rodriguez made in the Ultra Health Prospectus, and his identical, false oral representations, Rodriguez successfully convinced Abrams and Carra became investors in Ultra Health through an entity named MACCAM, LLC, an Arizona a limited liability company (“MACCAM”).

53.  MACCAM later transferred its investment in Ultra Health to CA2 with the knowledge and consent of Ultra Health.

54.  Abrams made substantial payments and incurred substantial out of pocket costs in making the initial investments encouraged by Rodriguez, which roughly total around one-half of Abrams’ total investment of nearly $12,000,000.00 . . . .

57. He later learned that Ultra Health in fact had not been awarded three dispensary registration certificates, but instead had been awarded zero dispensary registration certificates.

60.  Rodriguez made reassuring but false representations to Abrams at that time that Ultra Health could still obtain those three dispensary registration certificates through litigation with the non-profit companies which had actually been awarded the three certificates.

Author’s Comment: This is a troubling allegation.  See “Zoned Properties, Inc. & Duke Rodriguez Lawsuits.”  This article starts “Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC (all clients of mine) hold Dispensary Registration Certificates issued by the Arizona Department of Health Services.  These companies were involved in lawsuits with Duke Rodriguez, Zoned Properties, Inc. (aka ZDPYD), Ultra Health, LLC, and Cumbre Investment, LLC.”

67.  Abrams’ funds were indeed used to pay for litigation with the control persons of the non-profits which held the three dispensary registration certificates which Rodriguez had represented had been “awarded” to Ultra Health, funded the acquisition of control and management rights for two additional non-profit companies awarded dispensary registration certificates, and funded the acquisition of a large medical marijuana cultivation facility in Chino Valley, Arizona and related real estate and water rights.

68.  The aggregate investment of CA2 in Ultra Health today is nearly $12,000,000.00 . . . substantially all of which consists of funds invested by Abrams in or for Ultra Health through MACCAM and CA2. A true and correct compilation of documents summarizing much of the plaintiffs’ monies invested as alleged herein is attached hereto as Exhibit 4.

69.  Rodriguez represented to Abrams that he (Rodriguez) had invested $1,000,000.00 of his own money in Ultra Health which, on information and belief, was untrue.

72.g.  Rodriguez has placed himself in a position of substantial ownership of Ultra Health’s cultivation facility in Chino Valley and has not transferred ownership of that property and facility to Ultra Health

72.l.  [Rodriguez] has not caused the preparation of audits for either of the two nonprofit dispensary companies managed by Ultra Health, nor has he properly accounted for financial transactions between Ultra Health and those entities

73.  Rodriguez’s conduct alleged herein constitutes acts or omissions in breach of the OA [Operating Agreement] and or which constitute fraud, gross negligence, willful misconduct and or breach of fiduciary duty to Ultra Health and or plaintiffs

74.  . . . Rodriguez convinced Abrams and CA2 to make substantial payments for and on behalf of Ultra Health to entities controlled by Rodriguez, which entities were supposed to convey their assets into Ultra Health and or for the benefit of CA2 and Abrams, but Rodriguez has failed or refused to cause those transfers to occur.

75.  Specifically the following entities have received transfers from Abrams and/or CA2 directly of monies intended to be used to acquire assets for Ultra Health, which were supposed to have been ultimately conveyed to and for the benefit of Ultra Health, but with respect to which, today, substantial monies, and assets purchased with those monies, remain m the possession, custody and control of the entities and not Ultra Health: Cumbre; Stormwind; CVUH; Sold By Group.

Plaintiffs’ Claims for Relief

The plaintiffs’ Complaint asks for the following twelve claims for relief:

1.  First Claim for Relief:  The court issue a declaratory judgment that: (i) Rodriguez has been removed, effective as of March 26, 2015, as the Manager of Ultra Health, and (ii) Rodriguez is not entitled to any indemnity under the OA on grounds that his wrongful conduct as alleged herein constitutes acts or omissions in breach of the OA, constituted fraud, gross negligence willful misconduct and or breach of fiduciary duty to Ultra Health and or plaintiffs.

2.  Second Claim for Relief:  The court issue temporary and preliminary injunctive relief that Rodriguez was removed as a manager of Ultra Health.

3.  Third Claim for Relief:  CA2 and Abrams request for Uniform Fraudulent Transfer Act (“UFTA”) injunctive relief and will file a motion for appointment of a Special Master pursuant to Rule 53(a), Ariz. R. Civ. P.  Plaintiffs seek a UFTA injunction on a temporary and preliminary basis against Rodriguez, Stormwind, Cumbre, Sold By Group and CVUH.

4.  Fourth Claim for Relief:  CA2 seeks damages and specific performance.

5.  Fifth Claim for Relief:  CA2 seeks damages for breach of fiduciary duty.

6.  Sixth Claim for Relief: CA2 and Abrams seek damages for violations of the Arizona Consumer Fraud Act.

7.  Seventh Claim for Relief:  CA2 and Abrams seek any and all applicable restitutionary remedies from Rodriguez, Stormwind, Cumbre, Sold By Group and CVUH with respect to any monies or assets, if  any, not otherwise covered by the investment contract, the OA, including without limitation disgorgement.

8.  Eighth Claim for Relief:  Broken Arrow seeks two declaratory judgments against Rodriguez, first for his removal from the board of directors and second for a determination that he is not entitled to indemnification from the corporation.

9.  Ninth Claim for Relief:  Plaintiff Broken Arrow seeks temporary and preliminary injunctive relief that Rodriguez was removed as an officer and director.

10.  Tenth Claim for Relief:  CJK seeks two declaratory judgments against Rodriguez, first for his removal from the board of directors and second for a determination that he is not entitled to indemnification from the corporation.

11.  Eleventh Claim for Relief:  CJK seeks temporary and preliminary injunctive relief that Rodriguez was removed as an officer and director.

12.  Twelfth Claim for Relief:  CA2 and Abrams seek punitive damages.

Defendants’ Response to the Complaint

The defendants filed an Opposition to Application for Temporary Restraining Order in which they generally deny all of the allegations made in the Complaint.  A hearing was held on the plaintiffs’ application for a temporary restraining order and the court denied the application.  The following are interesting statements in the Opposition to Application for Temporary Restraining Order (paragraph numbers are from the Opposition):

II. Having passed through the difficult start-up period, CA2 Capital and Mr. Abrams are attempting a coup that would oust Mr. Rodriguez from the company he founded to take control over the operations.

II.B. Messrs. Abrams and Carra arc founding shareholders of an entity known as Zoned Properties, Inc. . . . Upon information and belief virtually all of the properties Zoned Properties holds are properties operated by Ultra Health, with one critical exception – the Chino Valley Property.  The Chino Valley Property would be a great additional asset for Zoned Properties, Inc. to acquire and then lease-back to Ultra Health. Unfortunately, however, Ultra Health retains ownership and control over the Chino Valley Property through its wholly owned subsidiary CVUH, LLC and it is not in Ultra Health’s best interest to sell the property to Zoned Properties under an exorbitant lease-back scenario. The only group this would benefit is the Zoned Properties, Inc. shareholders – Abrams and Carra aka CA2 Capital, LLC.  [Author’s Comment:  Duke Rodriguez’ company Cumbre Investments, LLC, owns 12.18% of Zoned Properties.]

II.B.  [Mr. Carra] has experience selling and promoting penny stocks, such as Zoned Properties, Inc. (OTC: ZDPY). In fact, Mr. Carra entered into a Letter of Consent with FINRA and paid a fine arising from FINRA’s allegations that he used multiple names or “handles” on internet message boards to promote certain stocks.  Attached here as Exhibit 2.

Stay tuned.  This case should get very interesting.

By |2019-06-14T08:29:17-07:00April 18th, 2015|AZ Marijuana Law Lawsuits, Zoned Properties & Duke Rodriguez|Comments Off on Zoned Properties’ Major Stockholders in Court Fight over Money & Control of Two Dispensaries
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SEC Charges Four Promoters with Manipulating Marijuana-Related Stocks

The following is the text of an August 5, 2014, Securities & Exchange Commission press release:

“The Securities and Exchange Commission today charged four promoters with ties to the Pacific Northwest for manipulating the securities of several microcap companies, including marijuana-related stocks that the agency has warned investors about in recent weeks.

The SEC alleges that the four promoters bought inexpensive shares of thinly traded penny stock companies on the open market and conducted pre-arranged, manipulative matched orders and wash trades to create the illusion of an active market in these stocks.  They then sold their shares in coordination with aggressive promotional campaigns that urged investors to buy the stocks because the prices were on the verge of rising substantially.  However, these companies had little to no business operations at the time. The promoters reaped more than $2.5 million in illegal profits through their schemes.

Two of the companies manipulated in this case – GrowLife Inc. and Hemp Inc. – claim to be related to the medical marijuana industry.  The SEC has issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industries to lure investors into stock manipulation schemes.  Other schemes by these four promoters involved an oil-and-gas company – Riverdale Oil and Gas Corporation – and three other microcap stocks, ISM International, Allied Products Corp, and Aden Solutions.

The SEC was able to unearth the schemes through the work of its recently created Microcap Fraud Task Force.

“Our Microcap Fraud Task Force is taking direct aim at abusive practices and serial violators within the microcap markets like these four promoters seeking to exploit retail investors for personal gain,” said Michael Paley, co-chair of the SEC’s Microcap Fraud Task Force.  “In this case, we meticulously reviewed trading records and developed the evidence necessary to connect these four promoters and their coordinated trading efforts.”

The SEC’s complaint filed in federal court in Tacoma, Wash., charges the following individuals:

  • Mikhail Galas, a stock promoter who lives in Vancouver, Wash.
  • Alexander Hawatmeh, a member of Worthmore Investments LLC, which owns a stock promotion website called stockhaven.com.  He formerly lived in Vancouver and currently resides in Lincoln City, Oregon.
  • Christopher Mrowca, a stock promoter who operates Money Runners Group LLC, which has an affiliated stock promotion website called MoneyRunnersGroup.com.  He lives in Bradenton, Fla.
  • Tovy Pustovit, who owns a stock promotion website called Explosive Alerts.  He also lives in Vancouver.

In a parallel action, the U.S. Attorney’s Office for the Western District of Washington announced criminal charges against Galas, Hawatmeh, and Mrowca.

According to the SEC’s complaint, GrowLife Inc. was part of a broader online promotion of several marijuana-related stocks in early 2014.  Mrowca specifically promoted GrowLife through his Money Runners Group website and predicted that the stock price would nearly double.  Mrowca, Galas, and Hawatmeh meanwhile engaged in manipulative trading designed to increase the price and volume of GrowLife stock, and they later sold their shares for illicit profits.

Similarly, the SEC alleges that Hawatmeh, Galas, and Mrowca bought and sold approximately 41.7 million shares of Hemp Inc. in January and February 2014 while the stock was actively promoted on the Internet.  For example, one Internet tout on February 6 claimed that Hemp could reach “a REAL Possible Gain of OVER 2900%.”  During the promotion, Hawatmeh, Mrowca, and Galas engaged in manipulative wash trades and matched orders to manipulate Hemp’s common stock before selling their shares for illegal gains.

“This was a carefully planned operation by Galas, Hawatmeh, Mrowca, and Pustovit to distort the performance of specific penny stocks as they were simultaneously promoted through social media and the Internet.  As the companies’ stock prices increased, these four promoters opportunistically dumped their shares for illicit gains,” said Amelia A. Cottrell, associate director in the SEC’s New York Regional Office.

The SEC’s complaint charges Galas, Hawatmeh, Mrowca and Pustovit with violating antifraud provisions of the federal securities laws.  The SEC seeks temporary, preliminary, and permanent injunctions along with an emergency asset freeze, disgorgement, prejudgment interest, financial penalties, and orders barring the promoters from participating in a penny stock offering.

The SEC’s complaint names Nadia Hawatmeh as a relief defendant for the purposes of recovering ill-gotten gains in her brokerage account, which was used by the promoters to conduct some of their manipulative trades.

The SEC’s investigation has been conducted by Michael Paley, Eric M. Schmidt, Mona Akhtar, Joseph Darragh, and Tejal Shah.  The case was supervised by Ms. Cottrell, and the litigation will be led by David Stoelting.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

”

By |2017-02-04T07:38:59-07:00August 5th, 2014|Legal Issues, Medbox, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on SEC Charges Four Promoters with Manipulating Marijuana-Related Stocks
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Gilbert Revokes Permit for Medical-marijuana Site

Arizona Republic:  “A medical-marijuana dispensary near Power and Warner roads in Gilbert likely won’t be opening any time soon as the town’s Planning Commission recently revoked the developer’s site use permit. . . . One developer, Duke Rodriguez with Ultra Health, held the use permit from the town.”

See “AZ Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary.”

By |2014-07-25T07:05:49-07:00July 15th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Gilbert Revokes Permit for Medical-marijuana Site
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Ultra Health, LLC Sued Again: Now in 4 Lawsuits

On March 5, 2014, Ultra Health, LLC, filed its first lawsuit in Maricopa County, Arizona.  On May 19, 2014, JDT Construction, LLC., sued Duke Rodriguez’ Ultra Health, LLC, in Yavapai County Superior Court for Ultra Health’s alleged failure to pay $826,493 .68 under a contract for construction at 2144 North Road l East, Chino Valley, Yavapai County, Arizona 86323.  The JDT Construction Complaint states that Ultra Health, LLC, did pay $1,778,383.91 under the contract and that:

“On May 5, 2014, pursuant to an order from the United States Bankruptcy Court of the District of Nevada on April 11, 2013 (Case No. BK-S-13-11930-btb) allowing Ultra Health to purchase the Property, Ultra Health designee, CVUH LLC recorded in Yavapai County, Arizona a Trustee’s Deed granting CVUH LLC all legal and beneficial interest in the Property subject to other liens, liabilities and encumbrances.”

JDT Construction, LLC, is asking the court to find that JDT has a valid mechanics’ lien, that the lien be foreclosed and the Sheriff of Yavapai County sell the Chino property to the highest bidder.

With the filing of the JDT Construction lawsuit, Ultra Heatlth, LLC, is now a party in four lawsuits filed in the last two and one half months.  To learn about Ultra Health’s other three lawsuits read “Zoned Properties, Inc. & Duke Rodriguez Lawsuits.”  See also “AZ Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary.”

Disclosure:  Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC (all clients of mine) are parties to some of the Ultra Health, LLC, lawsuits.

By |2019-06-14T08:28:37-07:00May 20th, 2014|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health, LLC Sued Again: Now in 4 Lawsuits
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SEC Warns Investors About Marijuana-Related Investments Amid Recent Trading Suspensions

The following is the text of a May 16, 2014, Securities & Exchange Commission press release:

The Securities and Exchange Commission today cautioned investors about the potential for fraud in microcap companies that claim their operations relate to the marijuana industry after the agency suspended trading in the fifth such company within the past two months.

The SEC issued an investor alert warning about possible scams involving marijuana-related investments, noting that fraudsters often exploit the latest growth industry to lure investors with the promise of high returns.  “For marijuana-related companies that are not required to report with the SEC, investors may have limited information about the company’s management, products, services, and finances,” the SEC’s alert says.  “When publicly available information is scarce, fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.”

Spearheaded by its Microcap Fraud Task Force, the SEC Enforcement Division scours the microcap market and proactively identifies companies with publicly disseminated information that appears inadequate or potentially inaccurate.  The SEC has the authority to issue trading suspensions against such companies while the questionable activity is further investigated.

As the markets opened today, the SEC suspended trading in Denver-based FusionPharm Inc., which claims to make a professional cultivation system for use by cannabis cultivators among others.  According to the SEC’s order, the trading suspension was issued “because of questions that have been raised about the accuracy of assertions by FusionPharm” concerning the company’s assets, revenues, financial statements, business transactions, and financial condition.

“Recent changes in state laws concerning medical and recreational marijuana have created new opportunities for penny stock fraud,” said Elisha Frank, co-chair of the SEC Enforcement Division’s Microcap Fraud Task Force.  “Wherever we see incomplete or misleading disclosures, we act quickly to protect investors.”

Other marijuana-related companies in which the SEC recently suspended trading are Irvine, Calif.-based Cannabusiness Group Inc., Woodland Hills, Calif.-based GrowLife Inc., Colorado Springs-based Advanced Cannabis Solutions Inc., and Bedford, Texas-based Petrotech Oil and Gas Inc.

Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.  More information about the trading suspension process is available in an SEC investor bulletin on the topic.

“We know from experience that fraudsters follow the headlines,” said Lori J. Schock, director of the SEC’s Office of Investor Education and Advocacy, which prepared the investor alert.  “Given the attention that marijuana-related companies have attracted recently, we urge investors to exercise caution when looking at investments in this space.  Always thoroughly research the company – and the person selling the investment – before making a decision.”

By |2017-02-04T07:38:59-07:00May 20th, 2014|Medbox, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on SEC Warns Investors About Marijuana-Related Investments Amid Recent Trading Suspensions
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Investor Alert: Marijuana-Related Investments

On May 16, 2014, the Securities and Exchange Commission published a detailed warning that is a must read for anybody who owns stock of or is considering purchasing stock of a company that provides  products products or services to state legal marijuana businesses.

The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn investors about potential risks involving investments in marijuana-related companies. 

The SEC has seen an increase in the number of investor complaints regarding marijuana-related investments.  The SEC recently issued temporary trading suspensions for the common stock of five different companies that claim their operations relate to the marijuana industry:

The SEC suspended trading in these companies because of questions regarding the accuracy of publicly-available information about these companies’ operations.  For two of the companies, the trading suspensions were also based on potential illegal activity (unlawful sales of securities and market manipulation).

Fraudsters often exploit the latest innovation, technology, product, or growth industry – in this case, marijuana – to lure investors with the promise of high returns.  Also, for marijuana-related companies that are not required to report with the SEC, investors may have limited information about the company’s management, products, services, and finances.  When publicly-available information is scarce, fraudsters can more easily spread false information about a company, making profits for themselves while creating losses for unsuspecting investors.

Risk of Prosecution for Marijuana-Related Companies.  If you are considering investing in a company that is connected to the marijuana industry, be aware that marijuana-related companies may be at risk of federal, and perhaps state, criminal prosecution.  The Department of Treasury recently issued guidance noting: “

[T]he Controlled Substances Act (“CSA”) makes it illegal under federal law to manufacture, distribute, or dispense marijuana.  Many states impose and enforce similar prohibitions.  Notwithstanding the federal ban, as of the date of this guidance, 20 states and the District of Columbia have legalized certain marijuana-related activity.”

Marijuana-related investments may be sold in unregistered offerings and may take many forms, including microcap stocks (low-priced stocks issued by the smallest of companies) such as penny stocks (the very lowest priced stocks).

Microcap Stocks

When you buy low-priced shares of a small company (e.g., you buy a stock that trades in the “over-the-counter” (also called OTC) market), you likely are investing in penny stocks or microcap stocks.  Microcap stocks are particularly vulnerable to fraudulent investment schemes because there is often limited publicly-available information about microcap companies.  Be cautious if you see red flags of potential microcap fraud such as:

  • SEC trading suspensions (the SEC has suspended public trading of the security)
  • E-mail and fax spam recommending a stock
  • Insiders own large amounts of stock
  • False or exaggerated press releases

Even in the absence of fraud, microcap stocks are among the most risky:

  • Information about microcap companies can be extremely difficult to find, making it less likely that quoted prices in the market reflect full and complete information about the company.
  • Many microcap companies are new and have no proven track record.  Some microcap companies have no assets, operations, or revenues.  Others have products and services that are still in development or have yet to be tested in the market.
  • The stock prices of microcap companies historically have been more volatile than the stock prices of larger companies.  Since low-priced stocks trade in low volumes, any size trade can have a large percentage impact.
  • The stock of microcap companies are often quoted on the OTC Bulletin Board (also called OTCBB) or OTC Link LLC (also called OTC Link).  OTCBB and OTC Link do not require companies to apply for listing or to meet any minimum financial standards.  Most of these companies do not meet the minimum listing requirements for trading on a national securities exchange, such as the New York Stock Exchange or the Nasdaq Stock Market.

Unregistered Offerings

Check the SEC’s EDGAR database and contact your state securities regulator to find out whether the marijuana-related company has registered its securities offering with the SEC or a state securities regulator.  If the offering is not registered, exercise extreme caution if you spot any of these red flags of potential investment fraud:

  • “Guaranteed” high investment returns.  If someone promises you a high rate of return on your investment, it likely is a fraudulent investment scheme.
  • Unsolicited offers, including through social media.  A new post on your wall, a tweet mentioning you, a direct message, an e-mail, a text, a phone call, or any other unsolicited – meaning you didn’t ask for it and don’t know the sender – communication regarding an investment “opportunity” may be part of a scam.
  • Pressure to buy RIGHT NOW.  Fraudsters may try to create a false sense of urgency or pitch the investment as a “limited time only” opportunity.
  • No net worth or income requirements.  To comply with federal securities laws, many unregistered offerings are limited to accredited investors and the seller should ask you about your net worth or income.

When investing in unregistered offerings, also consider these risks:

  • You may lose your entire investment.
  • You may not be able to sell the stock easily, and you may have to hold your investment indefinitely.
  • The company may not make information about its business or financial condition publicly available.

Research the Company

As with any investment, make sure you understand the marijuana-related company’s business and its products or services.  Carefully review all materials you are given and verify the truth of every statement you are told about the investment.

Pay attention to the company’s financial statements, particularly if they are not audited by a certified public accountant (also called a CPA).

If the company files reports with the SEC, review the most recent reports.

If the marijuana-related company is a microcap company that does not file reports with the SEC, ask your broker for the “Rule 15c2-11” file (the federal securities laws may require your broker to have certain information about the company).

If the marijuana-related company is offering securities in an unregistered offering, read the offering memorandum or private placement memorandum (also called PPM), and pay particular attention to any risk factors noted.  Review the terms of any subscription agreement or other agreements for the investment.

Search SEC.gov to see whether the SEC has taken any action against the company or anyone associated with the company.

For more information about how to research an investment, read our publication Ask Questions.

Research your Broker or Investment Adviser

Research the background of the individuals and firms offering and selling you these investments, including their registration/license status and disciplinary history:

  1. Search the SEC’s Investment Adviser Public Disclosure (IAPD) database.
  2. Search the Financial Industry Regulatory Authority (FINRA)’s BrokerCheck database.
  3. Contact your state securities regulator.

Additional Resources

FINRA Investor Alert: Marijuana Stock Scams
Investor Alert: Advertising for Unregistered Securities Offerings
Investor Alert: Don’t Trade on Pump-And-Dump Stock Emails
Investor Alert: Social Media and Investing – Avoiding Fraud
Microcap Fraud Spotlight 
Microcap Stock: A Guide for Investors
Department of the Treasury Financial Crimes Enforcement Network Guidance regarding BSA Expectations Regarding Marijuana-Related Businesses

Contact the SEC on SEC.gov:

Report possible securities fraud.
Report a problem.
Ask a question.

Stay informed

Receive Investor Alerts and Bulletins from the SEC’s Office of Investor Education and Advocacy (“OIEA”) by email or RSS feed.

Visit Investor.gov, the SEC’s website for individual investors.

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By |2019-06-18T19:57:11-07:00May 16th, 2014|Medbox, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Investor Alert: Marijuana-Related Investments
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Zoned Properties, Inc. & Duke Rodriguez Lawsuits

Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC (all clients of mine) hold Dispensary Registration Certificates issued by the Arizona Department of Health Services.  These companies are involved in lawsuits with Duke Rodriguez, Zoned Properties, Inc. (aka ZDPYD), Ultra Health, LLC, and Cumbre Investment, LLC. ZDPYD focuses “on properties in the medical marijuana industry.” See page 8 of ZPI’s April 15, 2014, Company Information & Disclosure Statement.  To learn more about Zoned Properties, Inc., read “Zoned Properties, Inc. Public Disclosures.”

According to page 16 of Zoned Properties, Inc.’s April 15, 2014, Disclosure Statement its major stockholders as of that date were Duke Rodriguez (2,200,000 shares – 9.29%), Marc Brannigan (1,500,000 shares – 6.34%), Alan Abrams (3,200,000 shares – 13.51%), Christopher Carra (2,200,000 shares – 9.29%), Greg Johnson (1,500,000 shares – 6.34%), MJ Trust (1,200,000 shares – 5.07%) and MAC CAM, LLC (700,000 preferred shares).  MAC CAM, LLC is owned by Marc Brannigan, Alan Abrams and Christopher Carra.  On May 13, 2014, ZDPYD did a 1:120 reverse stock split.  Duke Rodriguez is the member and manager of Ultra Health, LLC, and Cumbre Investment, LLC.  Zoned Properties, Inc., Cumbre Investment, LLC, and Ultra Health, LLC, have domestic addresses at 16624 N. 90th Street, Scottsdale, Arizona.

Zoned Properties, Inc., is now a party to three lawsuits involving the eviction (see lawsuit #5 below about the Clifton, Arizona premises) and attempted eviction (see lawsuits #2 and #3 below about the 410 S. Madison, Tempe, Arizona premises) of a medical marijuana dispensary tenant, Holistic Patient Wellness Group, LLC.

Check back from time to time because we will be adding pleadings as these cases progress.

Summary of Lawsuits

1. Ultra Health, LLC vs. Healing Healthcare 3, Inc., Scan4Health, LLC. and Holistic Patient Wellness Group, LLC

This lawsuit is Maricopa County Superior Court case number CV2014-005642.  On March 5, 2014, Ultra Health, LLC, filed a lawsuit against Healing Healthcare 3, Inc. and Scan4Health, LLC. Ultra Health, LLC’s Complaint contains the following statements:

“On September 15, 2013, Ultra Health and Healing Healthcare 3 entered into a Joint Venture Agreement for purposes of operating a marijuana cultivation facility with its principal place of business at the Tempe Lease facility. 

[The JV Agreement attached as Exhibit 3 to the Complaint ends abruptly at page 5 and does not have a signature page.]

The Tempe Joint Venture Agreement provided that legal title to the Joint Venture property and all assets, including the Joint Venture itself, shall remain in the name of Ultra Health.

Brannigan at Ultra Health threatening Duke Rodriguez [This incomplete sentence apparently refers to Marc Brannigan, the then CEO of Zoned Properties, Inc.]

Healing Healthcare has converted the marijuana product owned by Ultra Health [emphasis added]

Pleadings & Documents

  • Amended Complaint.  Ultra Health, LLC, added Holistic Patient Wellness Group, LLC, as a defendant.

“AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.”

2.  Holistic Patient Wellness Group, LLC vs. Zoned Properties, Inc., Duke Rodriguez, Marc Brannigan & Tempe Industrial Properties, LLC

On March 14, 2014, the plaintiff sued the defendants in Maricopa County Superior Court case number CV2014-003047.

Pleadings

3.  Tempe Industrial Properties, LLC, vs. Holistic Patient Wellness Group, LLC, & Healing Healthcare 3, Inc.

On March 19, 2014, twelve days after ZDPYD purchased the real property located at 410 S. Madison, Tempe, Arizona, ZDPY’s wholly owned subsidiary Tempe Industrial Property, LLC, filed a lawsuit to evict its first and only medical marijuana dispensary tenant.  This is Maricopa County Superior Court case number CV2014-005961.  ZDPYD focuses “on properties in the medical marijuana industry.”  On April 24, 2014, Tempe Industrial Properties, LLC, conveyed the real property back to Zoned Properties, Inc.

Pleadings

4. Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC vs. State of Arizona, Janice Brewer, Arizona Department of Health Services, Will Humble, Christopher Miller, Meagan Miller and Alexander De Soler.

On April 22, 2014, Plaintiffs sued Christopher Miller, Meagan Miller and Alexander De Soler to get a court order that they are not members, officers, board members or affiliated with Plaintiffs.  This is Maricopa County Superior Court case number CV2014-007233.

Pleadings

5.  Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC vs. Duke Rodriguez, Zoned Properties, Inc., Cumbre Investment, LLC, and Ultra Health, LLC.

This lawsuit was filed on April 25, 2014.  It is Maricopa County Superior Court case number CV2014-007302.  The lawsuit involves real property in Clifton, Arizona, in which Holistic Patient Wellness Group, LLC,, operated a medical marijuana dispensary until the dispensary was locked out of the premises by Duke Rodriguez’ company called Cumbre Investments, LLC.  Attorney Jeffrey Kaufman appeared at a hearing before Maricopa County Superior Court Judge Brain and told to the court that he represents Zoned Properties, Inc., and that Cumbre Investment, LLC, assigned the Clifton lease to Zoned Properties.  Zoned Properties, Inc., which focuses “on properties in the medical marijuana industry” now owns two parcels of Arizona real estate, is a tenant on a third parcel and is involved in three eviction lawsuits with a licensed medical marijuana dispensary.

Update:  Plaintiffs voluntarily dismissed this lawsuit on May 20, 2014, because in an April hearing in Maricopa County Superior Court Judge Brain stated he believed contracts involving Arizona medical marijuana dispensaries are not enforceable because they violate public policy.

Pleadings

6.  Ultra Health, LLC, vs. Healing Healthcare 3 Inc , Rakesh Pahwa, Geeta Pahwa, Scott Armstrong, David Sanchez & Kathy Sanchez

The complaint in this lawsuit was filed on April 29, 2014.  It is Maricopa County Superior Court case number CV2014-053115.

Pleadings

7.  JDT Construction, LLC., vs. Ultra Health, LLC

The complaint in this lawsuit was filed on May 19, 2014, in Yavapai County.  JDT Construction claims Ultra Health, LLC, owes JDT $826,493 .68 under a contract for construction at 2144 North Road l East, Chino Valley, Arizona.  It is Yavapai Superior Court case number P-1300-CV-201400555.

Pleadings

8.  Scott Armstrong vs. Duke Rodriguez & Sold By Group, LLC

The lawsuit was filed on December 13, 2013.  It is Maricopa County Superior Court case number CV2013-055265.  Sold By Group, LLC, is owned and managed by Duke Rodriguez.

Pleadings

9.  Sweetwater Ranch Association vs. Duke Rodriguez

The lawsuit was filed on May 20, 2011.  It is Maricopa County Superior Court case number CV2011-095146.

10.  Cavalry Spv I L L C  vs. Duke Rodriguez

The lawsuit was filed on October 25, 2002.  It is Maricopa County Superior Court case number TJ2002-004927.

11.  Bank of America vs. Duke Rodriguez

The lawsuit was filed on October 26, 2000.  It is Maricopa County Superior Court case number CV2000-019427.

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By |2019-06-14T08:28:25-07:00May 15th, 2014|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Zoned Properties, Inc. & Duke Rodriguez Lawsuits
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Zoned Properties, Inc. Public Disclosures

Zoned Properties, Inc., is a publicly traded corporation (symbol ZDPYD) that claims to “focus on properties in the medical marijuana industry.” See page 8 of ZPI’s April 15, 2014, Company Information & Disclosure Statement.  ZDPYD stock price per share in the last six months went from $.0754 on November 8, 2013, to a high of $21.98 on March 5, 2014, and down to $.68 on May 12, 2014.  On May 13, 2014, ZDPYD did a 1:120 reverse stock split.

The purpose of this article is to help people in the Arizona medical marijuana industry learn about Zoned Properties, Inc., a company that purchased its first of two Arizona real estate properties on January 20, 2014, and is now involved in three lawsuits in Arizona Superior Court with three medical marijuana dispensary clients of mine: Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC. To learn more about the Zoned Properties, Inc., lawsuits read “Zoned Properties, Inc. & Duke Rodriguez Lawsuits.”

The text inside quotes below was taken from ZDPYD’s public disclosures and press releases.  Text inside brackets

[ ] and outside of quotation marks was written by the author of this article.

1.  November 8, 2013, Company Information & Disclosure Statement

  • “The Company is a strategic real estate investment firm whose primary focus is acquiring commercial properties that face unique zoning challenges in the medical marijuana industry. The Company acquires commercial properties zoned within a variety of usage types such as industrial, agricultural, as well as mixed use. . . . The Company also manages a portfolio of properties that it owns and leases. The Company provides oversight on each and every property it manages”  Page 3.  [Emphasis added.  ZDPYD’s total assets as of 12/31/13 was $11,965. Page F-3 of the December 31, 2013, Financial Statement.]
  • “In September of 2013, Marc Brannigan, an individual resident of the State of Arizona, acquired 15,000,000 shares of common stock of the Company, representing approximately 91.54% of the issued and outstanding voting power of the Company.”  Page 4.
  • “On September 16, 2013, the Board of Directors of the Company appointed Marc Brannigan as President and Chief Executive Officer of the Company and Chairman of Board of Directors (sole director).”  Page 5.
  • “The Company also manages a portfolio of properties that it owns and leases.”  Page 6.
  • “The company’s initial holdings and acquisition targets are in the state of Arizona.”  Page 7.
  • “Additionally, the company has acquired a note for a medical marijuana dispensary located in Safford, Arizona. ZPI will soon foreclose on the building and own the property outright.”  Page 8.  [See the March 12, 2014, Press Release.]
  • “Once a property is acquired and re-zoned for a medical marijuana cultivation or dispensary location, ZPI can charge in some cases three to five times more than market value for rent”  Page 8.
  • “The Company currently has 5 full time employees.”  Page 9.
  • “We are a leader in our industry.”  Page 10.  [Emphasis added.  See the December 31, 2013, Financial Statement, which says ZDPYD’s only assets as of 12/31/13 was $11,965 cash & cash equivalent and it had no income in 2012 and 2013.]
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [2003].”  Page 10.  Emphasis added.
  • “Item X: The nature and extent of the issuer’s facilities.”  [This is question on Page 10, but ZDPYD did not answer it.]
  • “President, Chief Executive Officer and Director” is Marc Brannigan, owner of 15,000,000 shares of Common Stock.  Page 11.
  • “Conviction in a criminal proceeding or named as a defendant in a criminal proceeding: None”  Page 11.
  • “the Company borrowed funds to cover its daily operation, including but not limited to, consulting and advising fees, accounting fees, legal fees, compliance fees and others, from MAC CAM LLC, a related party owned by the Company’s President. As of September 30, 2013, the balance of notes payable to MAC CAM LLC was $25,000, which was evidenced by a convertible promissory note, dated on September 30, 2013, bearing interest at an interest rate of 8% per annum and due on demand (the “Note”). The holder of the Note has an option to convert all or any portion of the accrued interest and unpaid principal balance of the Note into the common stock of the Company or his successors, at a price of $0.05 per share.”  Page 11.
  • “Provide a list of the name, address and shareholdings of all persons beneficially owning more than five percent (5%) of any class of the issuer’s equity securities.  As of November 5, 2013: . . . Marc Brannigan . . . 15,000,000 Common Shares 91.54%.”  Page 12.
  • “The Company also manages a portfolio of properties that it owns and leases.”  Page 13.  [See the December 31, 2013, Financial Statement, which says ZDPYD’s only assets as of 12/31/13 was $11,965 cash & cash equivalent and it had no income in 2012 and 2013.]
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003].”  Page 13.  Emphasis added.
  • “There can be no assurance that revenues will be sufficient to cover future operating costs, and it may be necessary to continuously raise additional capital to sustain operations.”  Page 13.
  • “Material Contracts:  None.”  Page 15.

2.  December 31, 2013, Financial Statement

  • Total assets = $11,965 cash & cash equivalents. page F-3.  Emphasis added.
  • Revenue years 2012 + 2013 = $0.  page F-4.  Emphasis added.
  • Expenses 2013 = $336,547 & 2012 = $248,432. page F-4.  Emphasis added.

3.  February 5, 2014, Press Release

  • “Zoned Properties[SM], Inc. closes on site for 8th largest medical marijuana dispensary in the state of Arizona.” [Emphasis added.  As of May 4, 2014, no dispensary has ever operated on the Gilbert property.]
  • “ZDPY . . . announces that it has closed on all of the real estate associated with the approved site for a medical marijuana dispensary located in Gilbert, Arizona for $1.115 million.”  [“the Company acquired the land located in Gilbert, Arizona, for a total payment of $300,000.  April 15, 2014, Company Information & Disclosure Statement, Page 6.]
  • “Zoned Properties[SM], Inc. is in advanced discussions with the dispensary license holder who intends to occupy the facility”

4.  February 19, 2014, Press Release

  • “Zoned Properties, Inc. . . . has entered into a definitive agreement and opened escrow on a multi-tenant industrial complex in Tempe, Arizona.”
  • “The facility has several tenants including a state licensed Arizona medical marijuana cultivator.”

5.  March 7, 2014 Deed from Maryland, LLC, to Zoned Properties, Inc.

  • Special Warranty Deed
  • This is the first property acquired by ZDPYD that has a tenant (Holistic Patient Wellness Group, LLC, a client of my law firm) that is a licensed Arizona medical marijuana dispensary.  A co-tenant on the lease is Healing Healthcare 3, Inc.  The property is located at 410 S. Madison, Tempe, Arizona (the “Madison Property”).

6.  March 12, 2014, Press Release

  • “Monetizing Note for $210,500 Books First Profit of 2014”
  • “Zoned Properties, Inc. . . . announced that it has monetized the note on the Safford, Arizona dispensary location.”

7.  March 17, 2014, Deed from Zoned Properties, Inc., to Tempe Industrial Properties, LLC

  • Special Warranty Deed
  • ZDPYD transferred title of the Madison Property to its wholly owned subsidiary.

8.  March 17, 2014, Deed from Zoned Properties, Inc., to Gilbert Property Management, LLC

  • Special Warranty Deed
  • ZDPYD transferred title of the Gilbert real property to its wholly owned subsidiary.

9.  March 19, 2014, Tempe Industrial Properties, Inc. sues to Evict Holistic Patient Wellness Group, LLC, & Healing Healthcare 3, Inc.

  • The new landlord, a subsidiary of ZDPYD, which claims to “focus on properties in the medical marijuana industry.” started an eviction proceeding to evict its first and only medical marijuana dispensary tenant 12 days after ZDPY purchased the Madison Property.

10.  March 31, 2014 Press Release

  • ZDPYD “announced that after careful consideration, the board has recommended that Marc Brannigan should step down as acting CEO and board member of the company. As such, effective immediately, Marc Brannigan has resigned as the company’s CEO.”

11.  April 11, 2014, Arizona Corporation Commission Authorizes ZDPYD to Do Business in Arizona

12.  April 15, 2014, Press Release

  • ZDPYD ” is pleased to announce that Irvin Rosenfeld has joined their board of directors.”

13.  April 15, 2014, Company Information & Disclosure Statement

  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires.”  Page 5.
  • On January 24, 2014, Zoned Properties, Inc., issued 100,000 shares to Cumbre Investment, LLC.  Page 6.
  • “During the first quarter of 2014, the Company issued 5,857,000 shares of restricted common stock at a price of $1.00 per share to approximately 28 accredited investors pursuant to a private placement, exempt from registration pursuant to Rule 506(c) under the Securities Act of 1933, as amended. The total proceeds the Company received from this private placement were approximately $5,857,000.”  Page 7.
  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires. This can include complete architectural design and subsequent build-outs, general support, landscaping, general up-keep, and state of the art security systems.”  Page 8.
  • “Arizona offers opportunities in addition to acquiring . . . water rights and assured water supply credits (“Water”). Water is a strong focus of ZPI.”  Page 10.
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003]”  Page 10.  Emphasis added.
  • “Zoned Properties is the sole member of two established Limited Liabilities Companies: Tempe Industrial Properties LLC, which is the owner of one real estate asset managed by the Company, and Gilbert Property Management LLC, which has no operating activities as of the date of this Report.”  Page 11.  Emphasis added.
  • “The Company currently has 3 full-time employees.”  Page 12.
  • “We are a leader in our industry.”  Page 12.  Emphasis added.
  • “Item X: The nature and extent of the issuer’s facilities.”  [This is question on Page 13, but ZDPY did not answer it.]
  • “President, Treasurer and Secretary . . . Bryan McLaren . . . Number and class of issuer’s securities beneficially owned: Bryan McLaren 700,000 shares of Common Stock.”  Page 13.
  • “Former President, Chief Executive Officer, Secretary and Director* . . .  Marc Brannigan . . . Number and class of issuer’s securities beneficially owned: 1,500,000 shares of Common Stock.  * Mr. Brannigan resigned from all his positions and directorship of the Company on March 31, 2014.
  • “The Company borrowed funds to cover its daily operations, including but not limited to, consulting and advisory fees, accounting fees, legal fees, compliance fees and others, from MAC CAM LLC, a related party partially owned by the Company’s President.”  Page 14.
  • “Provide a list of the name, address and shareholdings of all persons beneficially owning more than five percent (5%) of any class of the issuer’s equity securities as of April 15, 2014.”  [The shareholders listed are:  Duke Rodriguez (2,200,000 shares – 9.29%), Marc Brannigan (1,500,000 shares – 6.34%), Alan Abrams (3,200,000 shares – 13.51%), Christopher Carra (2,200,000 shares – 9.29%), Greg Johnson (1,500,000 shares – 6.34%), MJ Trust (1,200,000 shares – 5.07%).  MAC CAM, LLC is listed as owning 700,000 shares of preferred stock.]  Page 16.
  • “The Company manages a portfolio of properties that it owns and leases and provides direct development on each and every property it acquires.”  Page 17. [Emphasis added.  According to its Press Releases and documents recorded with the Maricopa County Recorder ZDPY owns two parcels of land in Maricopa County, Arizona: the Madison Property leased to Holistic Patient Wellness Group, LLC, and Healing Healthcare 3, Inc., and the Gilbert property.]
  • “There was no cash flow from investing activities during the years ended December 31, 2013 and 2012, respectively.”  Page 18.
  • “The Company devotes substantially all of its efforts to establishing a new business, and there has been no significant revenue therefrom since incorporation [in 2003]”  Page 18. Emphasis added.  [See the March 12, 2014, Press Release that states: “Monetizing Note for $210,500 Books First Profit of 2014”]
  • “We had operating expenses of $336,547 and $248,432 for the years ended December 31, 2013 and 2012, respectively.”  Page 18.
  • “Net loss for the year ended December 31, 2013 was $387,316, increased by $180,030 compared to net loss of $207,286 for the year ended December 31, 2012.”  Page 18.
  • “There was no cash flow from investing activities during the years ended December 31, 2013 and 2012, respectively.”  Page 18.  Emphasis added.
  • “We had cash of $11,965 on hand as of December 31, 2013. On the short-term basis, we will be required to raise a significant amount of additional funds over the next 12 months to sustain operations. On the long-term basis, we will potentially need to raise capital to grow and develop our business.”  Page 19.  Emphasis added.

14.  April 24, 2014, Deed from Tempe Industrial Properties, LLC, to Zoned Properties, LLC

  • Quit Claim Deed
  • The subsidiary conveyed the Madison Property back to ZDPYD after holding title for 36 days.

15.  April 25, 2014, Officer/Director Change Form Filed with the Arizona Corporation Commission

  • ZDPYD notifies the Arizona Corporation Commission that Irvin Rosenfeld and Bryan McLaren became members of its Board of Directors.

16.  April 28, 2014, Officer/Director Change Form Filed with the Arizona Corporation Commission

  • ZDPYD notifies the Arizona Corporation Commission that Irvin Rosenfeld and Bryan McLaren ceased to be members of its Board of Directors.

17.  May 1, 2014 Court Hearing in Holistic Patient Wellness Group, LLC, East Valley Patient Wellness Group, LLC, and Natural Remedy Patient Center, LLC vs. Duke Rodriguez, Zoned Properties, Inc., Cumbre Investment, LLC, and Ultra Health, LLC.

This lawsuit was filed on April 25, 2014.  It is Maricopa County Superior Court case number CV2014-007302.  The lawsuit involves real property in Clifton, Arizona, in which Holistic Patient Wellness Group, LLC,, operated a medical marijuana dispensary until the dispensary was locked out of the premises by Duke Rodriguez’ company called Cumbre Investments, LLC.  Attorney Jeffrey Kaufman appeared at a hearing before Maricopa County Superior Court Judge Brain and told to the court that he represents Zoned Properties, Inc., and that Cumbre Investment, LLC, assigned the Clifton lease to Zoned Properties.  Zoned Properties, Inc., which focuses “on properties in the medical marijuana industry” now owns two parcels of Arizona real estate, is a tenant on a third parcel and is involved in three eviction related lawsuits.

Pleadings

By |2019-06-14T08:29:24-07:00May 15th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Zoned Properties, Inc. Public Disclosures
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Two Men Cease to be Directors of Zoned Properties, Inc.

On April 3, 2014, Irvin Rosenfeld and Bryan McLaren were elected to be Directors of Zoned Properties, Inc., a lessor of land, facilities and equipment to the medical marijuana industry.  On April 25, 2014, ZPI filed a Change of Officer/Director form with the Arizona Corporation Commission to add Irvin Rosenfeld and Bryan McLaren as directors.  On April 28, 2014, ZPI filed a Change of Officer/Director form that notified the ACC that Rosenfeld and McLaren ceased to be directors of the corporation.  The sole director listed on the ACC’s website as of April 28, 2014, was Leonard C. Salgado.  Rosenfeld and McLaren were directors for 25 days.

By |2019-06-14T08:27:55-07:00April 30th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Two Men Cease to be Directors of Zoned Properties, Inc.
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Medical Marijuana Dispensary Dispute

Eastern Arizona Courier:  “Medical marijuana cardholders who stopped by the Holistic Wellness Center in Clifton to purchase an allotment of cannabis Thursday came across a padlocked door and a handwritten sign indicating the business was temporarily closed. The closure wasn’t due to state or federal law enforcement officials, however, but was instituted as a casualty of a battle for ownership and the right to operate the dispensary.  The fight concerns an ownership group involving David and Kathy Sanchez against their former partner, Duke Rodriguez, and his group, Ultra Health.”

Duke Rodriguez and Ultra Health were never partners with David and Kathy Sanchez or Holistic Patient Wellness Group, LLC, the sole holder of a license to operate a medical marijuana dispensary in CHAA 83, the CHAA in which Clifton, Arizona, is located.  KEYTLaw, LLC, and Richard Keyt represent Holistic Patient Wellness Group, LLC.

By |2014-05-03T09:02:17-07:00April 24th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Medical Marijuana Dispensary Dispute
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Ultra Health, LLC, vs. Healing Healthcare, Inc., & Scan4Health, LLC

Ultra Health, LLC, sued Healing Healthcare 3, Inc. (Rocky Pahwa’s nonprofit corporation) and Scan4Health, LLC. See Ultra Health, LLC’s Verified Complaint and Application for Restraining Order and Preliminary and Permanent Injunction.  The basis of the lawsuit is a Joint Venture Agreement between the parties.  At a hearing on March 14, 2014, Judge Herrod asked the parties for evidence as to who has a license to own and operate an Arizona medical marijuana dispensary.  The defendants gave the judge the letter dated March 14, 2014, from the Arizona Department of Health Services, which states “AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.”

Ultra Health, LLC, amended its Complaint in the above-referenced lawsuit to add Holistic Patient Wellness Group, LLC, as a defendant.  HPWG is a client of my law firm, KEYTLaw, LLC.

By |2019-06-14T08:27:54-07:00April 9th, 2014|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health, LLC, vs. Healing Healthcare, Inc., & Scan4Health, LLC
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Ultra Health Threatens to Sue Florence

Florence Reminder & Blade Tribune:  “Duke Rodriguez, principal officer of Ultra Health in North Scottsdale, has hired a Scottsdale attorney to represent his company when it pursues a lawsuit against the town of Florence.  Jeffrey S. Kaufman will represent Ultra Health when it begins its legal battle to establish a medical marijuana dispensary in Florence. . . . Rodriguez said the decision comes in the aftermath of the Town Council’s 5-2 vote on March 17, which denied a conditional use permit to his company to dispense medical marijuana . . . . The lawsuit could be filed in Pinal County Superior Court as soon as tomorrow, Rodriguez said. . . .

[Rakesh “Rocky”] Pahwa, who was trying for his fourth conditional use permit in Florence, urged the council to vote against Ultra Health’s request. He said his nonprofit company, Healing Healthcare, has the dispensary license for the Florence Community Health Analysis Area, but was not on the application for the town’s permit.”

See also “Florence denies medical marijuana permit, again.”  This story states:

Rakesh “Rocky” Pahwa, up for his fourth try for a conditional use permit to open a dispensary in Florence, asked the council to deny it. He explained his nonprofit company, Healing Healthcare, has the dispensary license for the Florence community health analysis area but is not on the application for the town’s permit.  Pahwa was in partnership with the medical marijuana company Ultra Health of North Scottsdale, which was the applicant.

By |2017-02-04T07:39:01-07:00April 9th, 2014|AZ Marijuana Law Lawsuits, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Ultra Health Threatens to Sue Florence
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Sahuarita Medical Marijuana Dispensary to See Changes

Green Valley News & Sun:  “Sahuarita’s medical marijuana dispensary is under new management . . . . The name will be changed to UltraHealth Green Valley . . . said Duke Rodriguez . . . . UltraHealth, which specializes in several aspects of the medical marijuana industry, including growing the crop, has begun taking over management and will continue to take over during the next month, Rodriguez said. The three full-time employees will become employees of UltraHealth, which has 25 employees statewide . . . . His organization, which is more active in the Phoenix area, is courting a group of five dispensaries . . . . ‘We have experience at growing and cultivation and a wider access to inventory,” Rodriguez said’.”

Sahuarita’s dispensary is owned by Broken Arrow Herbal Center, Inc.

Query:  Where and how does Ultra Health have experience growing and cultivating marijuana?  See “AZ Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary.”

By |2019-06-14T08:28:16-07:00April 6th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Sahuarita Medical Marijuana Dispensary to See Changes
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FINRA Warns: Beware of Marijuana Stock Scams

FINRA is the Financial Industry Regulatory Authority.  FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry.  FINRA is not part of the government. It is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly.

FINRA issued an investor alert warning people about possible marijuana stock scams.  Here are some choice quotes from FINRA’s Marijuana Stock Scam alert.

We are reissuing this alert to warn investors not only about the potential for fraud in this arena, but also to reiterate the risks of investing in thinly traded companies about which little is known. Regardless of industry sector, any so-called “hot” stock can burn your portfolio. Rather than getting swept away, take time before you invest to learn more about the company, its products or services and the people running it. . . .

Like many investment scams, pitches to invest in potentially fraudulent marijuana-related companies may arrive in a variety of ways—faxes, email or text message invitations to webinars, infomercials, tweets or blog posts. Regardless of how you first hear about them, the offers almost always contain hallmarks of “pump and dump” ploys. Specifically, fraudsters lure investors with aggressive, optimistic—and potentially false and misleading—statements or information designed to create unwarranted demand for shares of a small, thinly traded company with little or no history of financial success (the pump). Once share prices and volumes reach a peak, the cons behind the scam sell off their shares at a profit, leaving investors with worthless stock (the dump). . . .

To avoid potential marijuana-related stock scams: . . . .

Know where the stock trades. Most unsolicited spam recommendations involve stocks that do not trade on The NASDAQ Stock Market (NASDAQ OMX), the New York Stock Exchange (NYSE Euronext) or other registered national securities exchanges. Instead, these stocks may be quoted on an over-the-counter (OTC) quotation platform like the FINRA-operated Over-the-Counter Bulletin Board (OTCBB) and the platform operated by OTC Markets Group, Inc. . . .

Be wary of frequent changes to a company’s name or business focus. Name changes and the potential for manipulation often go hand in hand. One low-priced stock now claiming to be in the medical marijuana business has had four name changes in the past 10 years. Another company switched from the coffee business to focus “on the rapidly emerging medical marijuana industries.” . . .

If a Problem Occurs

If you believe you’ve been defrauded or treated unfairly by a securities professional or firm, file a complaint. If you suspect that someone you know has been taken in by a scam, send a tip.

By |2017-02-04T07:39:01-07:00April 3rd, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on FINRA Warns: Beware of Marijuana Stock Scams
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Warning to Arizona Medical Marijuana Dispensaries

If you own or operate or are involved in management of an Arizona medical marijuana dispensary you need to take extra care to prevent people from hacking into your computer systems, camera systems and dispensary agent records of the Arizona Department of Health Services.  Many types of computer hacks are felonies under Arizona criminal law.  Today I contacted an Assistant Arizona Attorney General and discussed the following statute:

Arizona Revised Statutes Section 13-2316.A states:

A person who acts without authority or who exceeds authorization of use commits computer tampering by:

1. Accessing, altering, damaging or destroying any computer, computer system or network, or any part of a computer, computer system or network, with the intent to devise or execute any scheme or artifice to defraud or deceive, or to control property or services by means of false or fraudulent pretenses, representations or promises.

2. Knowingly altering, damaging, deleting or destroying computer programs or data.

3. Knowingly introducing a computer contaminant into any computer, computer system or network.

4. Recklessly disrupting or causing the disruption of computer, computer system or network services or denying or causing the denial of computer or network services to any authorized user of a computer, computer system or network.

5. Recklessly using a computer, computer system or network to engage in a scheme or course of conduct that is directed at another person and that seriously alarms, torments, threatens or terrorizes the person. For the purposes of this paragraph, the conduct must both:

(a) Cause a reasonable person to suffer substantial emotional distress.

(b) Serve no legitimate purpose.

6. Preventing a computer user from exiting a site, computer system or network-connected location in order to compel the user’s computer to continue communicating with, connecting to or displaying the content of the service, site or system.

Arizona Revised Statutes Section 13-2316.E states:

Computer tampering pursuant to subsection A, paragraph 1 of this section is a class 3 felony. Computer tampering pursuant to subsection A, paragraph 2, 3 or 4 of this section is a class 4 felony, unless the computer, computer system or network tampered with is a critical infrastructure resource, in which case it is a class 2 felony. Computer tampering pursuant to subsection A, paragraph 5 of this section is a class 5 felony.

By |2017-02-11T20:49:55-07:00April 2nd, 2014|Legal Issues, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Warning to Arizona Medical Marijuana Dispensaries
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AZ Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary

Ultra Health, LLC, an Arizona limited liability company, sued Healing Healthcare 3, Inc., an Arizona nonprofit corporation for among other things, breach of a joint venture agreement that involves the marijuana grow facility at 410 S Madison, Tempe, Arizona (the “Premises”). See a copy of Ultra Health, LLC’s, Complaint.

During a hearing in Maricopa County Superior Court on March 14, 2014, Ultra Health, LLC’s attorney claimed that Ultra Health, LLC, has some kind of license related somehow to medical marijuana.  The judge asked the parties to submit to him by the end of business that day proof from the Arizona Department of Health Services that the party had a medical marijuana dispensary license.

Healing Healthcare 3, Inc., is a co-tenant on the lease for the Premises with Holistic Patient Wellness Group, LLC.  Below is the text of a March 14, 2014, the letter sent by AZDHS to Holistic Patient Wellness Group, LLC, that Healing Healthcare 3, Inc., submitted to the judge on March 14, 2014.

March 14, 2014

Kathy Sanchez, Principal Officer
Holistic
45000 S, Lakeshore Drive, Suite 343
Tempe, Arizona 85285

RE: Medical Marijuana Program

Dear Ms. Sanchez:

Pursuant to the request of the dispensary certificate holder to clarify ownership and authority to operate a medical marijuana dispensary and cultivation site, the Arizona Department of Health Services (AZDHS) confirms that a dispensary registration certificate (DRC) was issued to Holistic Patient Wellness Group, LLC.  Further, AZDHS issued an approval to operate to Holistic Patient Wellness Group, LLC to operate a dispensary and cultivation site and AZDHS recognizes them as the current and sole holders of the DRC.

AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.

Sincerely,

Jeff Bloomberg, Manager
Division for Planning and Operations, Administrative Counsel and Rules

I’m sorry, but I can’t help but repeat my favorite part of the above letter:

“AZDHS can confirm that it does not recognize Ultra Health, LLC as a holder of this or any other dispensary registration certificate.”

To learn more about Ultra Health, LLC, enter Ultra Health in the search box at the top right of this page and press your enter key or click on the topic in the right column called “Zoned Properties & Duke Rodriguez.”

For the record, Holistic Patient Wellness Group, LLC, is a client of mine.

By |2014-05-24T09:26:13-07:00March 15th, 2014|AZ Marijuana Law Lawsuits, Dept Health Services, Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on AZ Dept. of Health Services Confirms Ultra Health, LLC Lacks a License for a Medical Marijuana Dispensary
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Zoned Properties, Inc. Acquires Real Estate for Key Arizona Medical Marijuana Dispensary

Wall St. Journal:  “Zoned Properties, Inc. . . . a lessor of land, facilities, and equipment to the medical marijuana market in Arizona announces that it has closed on all of the real estate associated with the approved site for a medical marijuana dispensary located in Gilbert, Arizona for $1.115 million. The Town of Gilbert has already granted a conditional use permit and approved the design of the property, which is properly zoned for a medical marijuana dispensary.”

A search of deeds filed with the Maricopa County Recorder shows a Warranty Deed and affidavit of property value for a parcel of vacant land acquired by Zoned Properties, Inc., on January 30, 2014, for $300,000.  The property is located at 988 South 182nd Place, Gilbert, Arizona.

Query:  Why does Zoned Properties, Inc., say it purchased the Gilbert property for $1.115 million when the affidavit of property value states the purchase price was $300,000?

Zoned Properties, Inc., a Nevada corporation, lists its headquarters in Scottsdale, Arizona, but it is not a corporation formed in Arizona or licensed to do business in Arizona. Zoned Properties, Inc., is violating Arizona Revised Statutes Section 10-1501.A, which states “A foreign corporation shall not transact business in this state until it is granted authority to transact business in this state.”

The corporation was formerly named “Vanguard Minerals Corp” until 10-2013, “knewtrino, Inc.” until 10-2007 and “Mongolian Explorations Ltd.” until 5-2006.  See its financial statement for the nine month period ending September 30, 2013.

Zoned Properties, Inc., appears to be a publicly traded company.  Marc J. Brannigan is the President & CEO and Charles Randall is the COO.

By |2019-06-14T08:28:49-07:00February 22nd, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Zoned Properties, Inc. Acquires Real Estate for Key Arizona Medical Marijuana Dispensary
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Medical Pot Firm Seeks Business Permit

Florence Reminder & Blade Tribune:  “The 5,000-square-foot building looks even less distinguished than its plain-looking neighbors in a light-industrial area several blocks from downtown. . . . Duke Rodriguez, principal officer of Ultra Health, said the company’s marijuana is grown in a very controlled, sterile environment . . . . Ultra Health is partnering with Rakesh “Rocky” Pahwa, owner of medical imaging clinics in the Valley, for a medical marijuana dispensary where the Riverbottom Grill is now. The company is also working to open dispensaries in Gilbert and Chandler.”

By |2014-04-30T22:56:37-07:00February 6th, 2014|Stories & Articles, Zoned Properties & Duke Rodriguez|Comments Off on Medical Pot Firm Seeks Business Permit
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