The Securities and Exchange Commission has charged a Texas-based investment fund and its founder with defrauding investors with false promises of massive returns in cannabis-related businesses.

The civil injunctive action, filed September 5, 2018, alleges that Greenview Investment Partners L.P. and its founder Michael E. Cone used misleading marketing materials in raising more than $3.3 million from investors. Cone allegedly employed boiler room sales staff who made cold calls to investors and promised them up to 24 percent annual returns from investments in Greenview.

According to the complaint, Cone used an alias to conceal his prior criminal convictions, lied about having a former agent from the U.S. Drug Enforcement Administration on staff, and falsely claimed to have a long record of profitably investing millions in cannabis-related businesses. The complaint alleges that, in reality, Greenview had no track record and its sole investment of $400,000 was in a cannabis company that had yet to harvest a crop.

According to the complaint, Cone spent investors' money on designer clothes and luxury cars, and on payments to earlier investors to prolong the alleged scheme.

In a parallel criminal proceeding, the U.S. Attorney's Office for the Central District of California charged Cone and seized approximately $1.4 million in cash and assets.

The SEC's complaint charges Greenview and Cone with violating Sections 5(a), 5(c), and 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. Cone agreed to an officer-and-director bar and a permanent injunction. The court will determine disgorgement and prejudgment interest at a later time.