It's been nothing if not an interesting year and a half for Rob Weakley.
[Update: His response to the lawsuit appears below.]
At the start of 2015, I was knocking on Weakley's listed residence seeking comment on a sensationalized split with fellow Pebble Beach Food & Wine co-founder David.
(The resulting "Looking for hope in the dramatic David Bernahl-Rob Weakley-Coastal Luxury Management breakdown" provides a lot of background, including how L.A.'s Faith & Flower restaurant plays in.)
Later came more cross-suits over his payout from Coastal Luxury Management.
Insiders wondered if he needed the money on a tighter timeline to invest in his next, as-of-then-unnanounced, project.
When I met with him in Seaside, he didn't want to talk about CLM. He wanted to talk about the fastest growing industry in the world: medicinal marijuana.
Altai Brands taste tests—of the virginal versions—revealed quality stuff.
But next came whispers Weakley was in trouble for misrepresenting how big his stake in Altai was, among other misdeeds.
Not long thereafter, Altai co-founder Gavin Kogan, a seasoned medical marijuana advocate and attorney with a long local history of defending it legally, left Altai.
The whispers returned, but a non-disclosure agreement prevented Kogan from shedding any light.
The Weekly was slowly scratching away until reports cropped up this weekend that a formal suit has been brought against Weakley by a primary investor.
BuzzFeed came through with a piece from Amanda Chicago Lewis called "An Investor Is Suing A California Edible Pot Company For Fraud."
"A California investor claims marijuana chocolates brand Altai swindled him out of $750,000 under false pretenses," the report reads. "The CEO allegedly used the money on private jets and fancy hotels."
Some things that stand out from the lawsuit itself, brought by Hannaford Enterprises, LLC—represented by the same firm who represented Bernahl in suits against Weakly—in the United States District Court, San Jose Division:
• "Beginning in January 2015, to lure and defraud unsuspecting investors, Weakley (on behalf of himself and [Altai parent] Indus) falsely represented orally and in writing to prospective investors including plaintiff that Weakley had personally invested $574,250 into the company."
It alleges no actual investment of a promised $250,000 in cash, and adds the fair market value of $324,250 for his insights was overblown.
"Weakley knew that it would be important and highly material to prospective investors to know that he (as the founder and CEO of the company) had made a sizable personal cash investment."
• "As part of his effort to conceal his fraud from investors…Weakley fired the company’s CFO (Joe Halligan) after only four months, and refused to hire a new CFO despite there being qualified, able, and willing candidates to fill the position."
• "Weakley then drained the company of investor money, using the company’s money as if it were his own personal piggy bank. Instead of timely paying the company’s vendors (including the law firm of Morgan Lewis) who endured long periods of time without payment, Weakley lavished himself with cash to live an opulent lifestyle. For example, the company paid for a private air service (Surf Air), which Weakley frequently used for personal and family purposes without reimbursing the company."
• "Weakley also used company funds to pay his personal legal bills (including the costs of defending against a separate securities fraud lawsuit filed against him). And, despite the company being strapped for cash and not paying vendors, when Weakley travelled, he stayed only at posh hotels the company could not afford like the Peninsula Hotel, the L’Ermitage Hotel in Beverly Hills, and the Four Seasons."
A call to Weakley Monday went to voicemail.
His voicemail—and his hands—are currently full.
He later replied to an email by stating he and his team are preparing a statement.
That statement appears here:
INDUS Holding Company is a young, rapidly growing company that is well-positioned to become a market leader in the quickly evolving cannabis industry.
The Hannaford complaint exploits the legal privilege afforded to allegations in a filed civil action to make false public accusations against INDUS and its chief executive officer.
The company, as a private enterprise, will only remark that these false accusations were expressed a number of months ago by the principal of Hannaford, John Knight.
After being addressed by the company, John Knight of Hannaford, in an email dated January 10, 2016 and in a meeting of the company’s stockholders expressed his satisfaction and support for the company and its management.