Unrivaled Brands Inc said it has filed a cross-complaint against Frank Kavanaugh, Jay Yadon, Bernard Steimman, and People’s California LLC for fraud and negligent misrepresentation related to the sale of the dispensary People’s First Choice and other assets to Unrivaled in November 2021.
Filed on September 20, 2022, Unrivaled’s cross-complaint alleges that around the time of the sale, Kavanaugh, Yadon, and Steimman, through entity New Patriot Holdings Inc, siphoned away over US$5 million from Unrivaled through backdated accounting entries and write-offs related to the People’s Dispensary.
Santa Anna, California-based Unrivaled said People’s California lists Fort Ashford Funds, BRP Ventures, and People’s LLC as managers/members on filings with the California Secretary of State. Fort Ashford Funds is a privately held investment firm that lists Frank and Susan Kavanaugh, and Andrew Krajacic as managing directors on its website. BRP Ventures is a consulting firm listing John Yadon as a manager/nember.
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Unrivaled’s newly appointed Interim CEO Sabas Carrillo said one of his first tasks was to investigate the events and circumstances related to the acquisition of People’s California assets.
“I had grave concerns about the transactions and the significant red flags surrounding the deals. The more my team digs into the facts, the more we find,” Carrillo said in a statement.
“In addition to our cross-complaint for fraud based on what my team and I had found after only a few weeks at Unrivaled, we expect additional claims will have to be made in the near future as we continue to investigate,” Carrillo added.
According to the cross-complaint, Unrivaled assumed over $4 million in IRS tax debt accrued by the People’s Dispensary while under the leadership of Kavanaugh, Yadon, and Steimman.
In addition, the cross-complaint alleges that $17 million in cash was required to be paid by Unrivaled before the deal had even closed. The cross-complaint notes that part of the substantial up-front cash payment was demanded because Kavanaugh, Yadon, and Steimman required funding for a pending project in Salinas, California.
“We want our shareholders, the city of Santa Ana, and the entire California cannabis community to know that we are committed to aggressively defending Unrivaled from fraud,” said Carrillo.
Unrivalled Brands is a multi-state vertically integrated cannabis company with operations in California and Oregon.
Contact the author at susie@proactiveinvestors.com