Cannabis bad boy Dan Bilzerian and company Flaming Marks (CSE: BILZ) have asked the Securities & Exchange Commission for a break as it faces criminal charges. The SEC just said no and is now sue the company.
In a case filed earlier this week, the SEC is suing Ignite Brands Ltd. for failing to produce documents as she attempts to pursue an accounting fraud investigation. Ignite wants the subpoena to be “suspended” while criminal authorities conduct a criminal investigation. The SEC argues that just because the company is facing multiple investigations, it cannot ask the SEC to withdraw. The SEC case revealed that Ignite confessed as part of a criminal investigation.
According to the SEC case, “SEC staff discovered information indicating that the defendant may have filed public financial statements that contain false or misleading statements regarding income earned and recognized during the company’s fiscal year. ending on December 31, 2020”.
In May 2022, the SEC told Ignite’s attorney that the company had to provide certain documents. The company said it would comply by June 15, but then asked for an extension until July 15. On June 30, some documents were sent to the SEC, but that was not all they asked for as the company described it as a significant start.
According to the complaint, the SEC requested documents relating to Ignite’s accounting policies on revenue recognition and other accounting matters; Ignite’s internal financial reports; Ignite internal audit working papers; communications between Ignite and its external auditor on revenue recognition; Ignite sales forecasts and budgeting; general ledgers and journal entries from Ignite for certain sales transactions; and underlying sales documentation for Ignite’s revenue-generating activities. Instead, Ignite sent copies of agreements with third parties for various services related to Respondent’s products, board meeting minutes, and internal organizational charts.
Then Ignite asked for another extension until August 1 and eventually the SEC agreed to an extension until August 23. Instead of complying, Ignite requested a pause in the investigation. The SEC’s response was to ask a court to compel the company to provide the requested documents.
Ignite was founded in 2017 by Dan Bilzerian who caused a stir with his social media posts of sexy beautiful women, guns and his own muscular figure. Bilzerian first became known for being a winning poker player, but some claimed his winnings were embellished. According to Bloomberg, in July 2020, former Ignite chairman Curtis Heffernan sued Bilzerian for wrongful termination. Heffernan claimed he was fired for criticizing Bilzerian’s embezzlement of company funds for his lavish lifestyle. Bilzerian spent a million dollars to appear in the film Lone Survivor, then sued the filmmakers because his screen time had dropped from the agreed-upon eight minutes to one minute.
The company reversed the price of publicly traded shares and went private on August 29. The company said in a Press release, “Ignite shares are thinly traded and offer few liquidity opportunities for shareholders; (b) the expense of being a public company outweighs the benefits; and (c) the proposed combination provides shareholders, other than shareholders who will remain after the combination, with a significant liquidity event that provides an opportunity to realize the value of their shares at a significant premium to current market prices.