Tietz et al v BridgeMark Financial Corp et al

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Two investors, Michael Tietz and Duane Loewen, have filed a class action lawsuit against a group of stock promoters and purported consultants, known as the Bridgemark Group, and 11 public companies. They allege that they suffered damage after buying shares in the companies that were part of an illegal share distribution scheme.

 

The scheme is alleged to involve the following steps:

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• The 11 companies issued shares to some of the purported consultants by private placement at a publicly disclosed share price.

• The purported consultants agreed to buy the shares on the condition that the companies would pay them or related entities lump sum consulting fees on the closing of the placements or shortly thereafter.

• The consulting fees consisted of a significant portion (in some cases, substantially all) of the proceeds of the private placements, leaving little or no working capital for the companies.

• The consulting agreements were a scam and false pretense, as neither the companies nor the purported consultants had any bona fide expectation that services of any real value would be provided, and no services were in fact provided.

• The purported consultants sold their shares on the secondary market at prices lower than the disclosed private placement price, but which still resulted in a substantial profit.

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The class action lawsuit seeks damages from the Bridgemark Group, the 11 companies and their executives, as well as an accounting of all funds received by them as a result of the scheme.

So far, three of the 11 companies have been removed from the lawsuit:

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• Abattis Bioceuticals Corp., a biotechnology company focused on natural health products, including cannabis, was removed because there was no evidence that the scheme was implemented with this company.

• Beleave Inc., a cannabis company that filed for bankruptcy in 2020, settled with the plaintiffs for $2.4 million. The settlement was approved by the B.C. Supreme Court in January 2021.

• PreveCeutical Medical Inc., a company focused on developing preventive and curative therapies using organic and nature identical products, settled with the plaintiffs for $350,000. The settlement was approved by the B.C. Supreme Court in February 2021.

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Speakeasy Cannabis Club Ltd., a licensed producer of medical and recreational cannabis, has entered into bankruptcy proceedings which has stayed the claims in the lawsuit against it.

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The lawsuit is still ongoing against the remaining seven companies:

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• Green 2 Blue Energy Corp., a company that claims to produce biomass fuel pellets from sawdust and wood waste.

• Cryptobloc Technologies Corp. (formerly Global Remote Technologies Ltd.), a company that claims to provide blockchain solutions for various industries.

• BLOK Technologies Inc., a company that claims to develop software platforms for the blockchain and cannabis sectors.

• New Point Exploration Corp., a company that claims to be engaged in mineral exploration and development.

• Affinor Growers Inc., a company that claims to be a vertical farming technology company.

• Citation Growth Corp. (formerly Liht Cannabis Corp.), a company that claims to be a licensed producer of organic cannabis.

• Kootenay Zinc Corp., a company that claims to be engaged in mineral exploration and development.

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The hearing to certify the action as a class action is scheduled for August 21, 2023.

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