A lawsuit has been filed against individuals connected with a company that partnered with a large-scale East Ladner greenhouse operation to grow cannabis alleging a years-long conspiracy in which many millions of dollars were unlawfully siphoned from the company.
In a petition filed in BC Supreme Court, Brian Mohammed seeks to sue a number of individuals connected with Agra Ventures Ltd., many of whom are described as current or former insiders or purported consultants to Agra and/or two other public companies, alleging they were engaged in unlawful schemes.
A shareholder, Mohammed, among other things, states he “is concerned that the proposed defendants, which include all but one of the current directors on Agra’s board, breached their fiduciary duties and duty of care and/or carried out a long-running conspiracy whereby over $186.2 million of value was siphoned out of Agra.”
Unlike a typical securities class action where investors sue a company for their investment losses, the complainant is not seeking to sue Agra, but seeks the permission of the court to represent Agra and sue a number of defendants.
The proposed lawsuit alleges that the proposed defendants used their positions to cause Agra to engage in 18 transactions between June 6, 2019 and Nov. 5, 2020, whereby Agra, either directly or through an intermediary, acquired worthless companies and assets owned by the proposed defendants at highly inflated prices.
They are also accused of providing loans that were never repaid or intended to be paid back.
The proposed lawsuit also alleges that they caused Agra to engage in 17 share issuances between March 29, 2018 and May 1, 2020, whereby over $7 million in common shares and over 128.5 million options were granted to those named in the petition for allegedly sham consulting agreements, falsified achievement bonuses or to settle sham debts.
There is no “Class” defined in the proposed lawsuit and shareholders of Agra, including the complainant, would not be paid any net recovery directly.
Any net proceeds recovered would be returned to Agra.
The action was filed late last month and Agra Ventures, formerly called AgraFlora Organics International Inc., was served the petition Sept. 2.
In a statement issued Sept. 17, the company said it “takes the allegations contained within the claim seriously and has engaged legal counsel to investigate the alleged matters and to respond to the proposed petition.”
A publicly traded company, Agra Ventures notes it is focused on the international cannabis industry, dedicated to the cultivation, distribution and marketing of high-quality cannabis and cannabis-infused products worldwide.
Its primary asset in Canada is Boundary Bay Cannabis, the Delta-based greenhouse formerly called Houweling Nurseries Ltd.
After the partnership was signed, the greenhouse operation, until this year, was called Propagation Services Canada. The complainant notes a single gram of cannabis has yet to be sold from the facility.
Members of the Houweling family, including Rueben and Cornelius Houweling, and their company are named in the proposed lawsuit.
Agra’s also has a wholly-owned European subsidiary called Farmako GmbH.