(Associated Press file)

“High risk, high reward” — Who is penny pot-stock wizard David Weiner?

Glassman says Weiner made average returns on GrowLife.

“W-Net’s investment in GrowLife over three years yielded a return comparable to the [Standard & Poor’s 500 Index] but with significantly more risk,” Glassman writes. The S&P 500 had a total return of 56 percent from Dec. 31, 2010, to Dec. 31, 2013.

Weiner makes more on real estate than he does from stock investing, Glassman says.

“Mr. Weiner’s main source of income comes from his commercial real estate business, in which he leases and manages office buildings in Southern California — not from financing growth-stage companies,” Glassman writes. On his LinkedIn page, Weiner said he had amassed $50 million in Los Angeles real estate.

GrowLife, like Vape and many other penny stocks, went public through a reverse merger, in which a private company buys a public shell company — one that has failed yet still has shares trading. The private company inserts itself into the public one, bypassing an initial public offering, which takes longer and brings more scrutiny from the SEC.

Reverse mergers have a bad name on Wall Street. In a June 2011 bulletin, the SEC warned that companies going public via reverse mergers are susceptible to fraud. Some are legitimate and successful, though. Berkshire Hathaway, founded by billionaire Warren Buffett, came into being through a reverse merger.

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Regulatory filings show that Weiner has invested in at least six companies created by reverse mergers. He owned at least part of the shell company in three of them. The investments were made through W-Net or another company he controls, Woodman Management Corp.

Former Weiner partner Ellins says GrowLife, which operates seven stores in five states, was his idea. Weiner was the moneyman, Ellins says.

“He’s just a necessary part of the food chain,” he says. “He’s the guy with the money. I’m the guy who builds companies.”

GrowLife got its start as a public company in February 2010, when Weiner, through Woodman, paid $210,000 for most of Catalyst Lighting Group Inc., a bankrupt public company that once made poles for outdoor lights, according to a filing with the SEC.

Next, W-Net joined a round of private investment in Phototron, a maker of tabletop greenhouses that advertised in “High Times” magazine. Investors included Lars Mapstead, a founder of Various, the company that operated adultfriendfinder.com and other sex sites before they were bought by Penthouse Media and Michael Rosen, former chief marketing officer at Herbalife.

Two of Weiner’s nephews, Adam Liebross and Lee Mendelson, bought 14 percent of Phototron between them.

(A distant relation of Weiner and her husband both work at Bloomberg News. They did not participate in the preparation of this story.)

Christine Sclafani, an actress who starred in the films “Milf & Cookies” and “Douchebags,” says she invested her own money and got “gift shares” in Phototron for making instructional videos on how to load sphagnum moss, water and chemicals into a Phototron greenhouse. Sclafani says she learned about the company from Denkin, the Milken panelist and a high school friend.

“He’s doing everything legally,” she says of Denkin. “They do press releases; they do things to shoot their stock up. That’s their job.”

Denkin didn’t return phone calls.

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In all, Phototron sold 666,666 shares for $1 million to Weiner, his nephews and other Phototron investors in a private transaction that closed on Feb. 14, 2011, according to regulatory filings. Less than a month later, Phototron merged with Catalyst Lighting, and the investors swapped their 666,666 Phototron shares for 52.2 million shares in a new, public company, still called Phototron. The name was changed to GrowLife in 2012; the company’s stock ticker remains PHOT.

The conversion rate meant that Weiner and his co-investors got shares in GrowLife at 1.9 cents apiece. The shares were initially unregistered, requiring that the group hold them for more than a year before selling. To avoid the wait, they had to register the shares, which meant disclosing financial information and any risks associated with the company to the SEC.

The investors filed to register a portion of their shares on June 8, 2011. The SEC cleared the share sale, and the registration became effective on June 22. On that same day, GrowLife began advertising itself as an up-and-coming purveyor of marijuana supplies and equipment. A June 22 press release described plans to sell the Phototron greenhouses through networks of citizen dealers, the same way Herbalife sells protein shakes and supplements.

It took about a year for trading volume to build in the company. Volume topped 1 million shares a day on May 31, 2012, and the price averaged 5.5 cents a share that month. Had the original Phototron investors sold then, they would have almost tripled their money.

Both price and volume spiked in November 2012 after voters in Colorado and Washington approved legal recreational sales of marijuana. GrowLife issued a series of press releases, including one on Nov. 13 in which it announced that its greenhouses now shipped with LED lights that improved crop yields, part of the company’s focus on selling “the picks and shovels of the growing ‘green rush.'”

GrowLife touted the stock itself, not just the business, in June 2013, when it put out a press release saying that Grass Roots Research & Distribution, led by a former Bear Stearns stock analyst named D. Paul Cohen, had written a 55-page report calling GrowLife’s business model “brilliant” and assigning it a price target of 22 cents a share, up from the 4.5 cents the stock fetched at the time.

In fine print on page 50, Cohen warns, “Do not base any investment decision or rely on information in this commercial advertisement.”

Cohen says GrowLife paid him to write the report. He also says he owns GrowLife shares. All of this is legal, he says, and it hasn’t colored his opinion of the company.

“GrowLife is a heck of a company,” he says. “I’m saying that objectively.”

Before financing GrowLife, Weiner worked and invested in a wide variety of industries. He joined the Internet boom in 1996, when he became president of K-tel. In April 1998, the music retailer known for late-night TV ads for its Super Hits compilations announced plans to sell online, sending its shares to $68 from $7. Weiner sold 390,000 shares for $22 to $33, according to regulatory filings, grossing at least $8 million. He resigned three months after the last of the sales.

Next, Weiner turned to fashion. Paul Guez, a French clothing designer who had gotten rich by starting Sasson Jeans in the 1980s, founded Antik Denim in 2004. Weiner, according to his LinkedIn profile, took the company public the following year. SEC documents show that Antik merged with a shell company called Marine Jet Technology, whose shares were flat-lined at $2.50. They started rising just before April 14, 2005, when Antik and Marine agreed to merge, and peaked at $25.52 that day. They fell to pennies from there and in 2008 were delisted from the Nasdaq Stock Market.

Guez says he’s still an admirer of Weiner. Guez’s daughters, Elizabeth and Kiera, were early investors in GrowLife, buying 1.3 million shares, according to SEC filings, a purchase Paul Guez confirms.

“He is a wonderful guy,” Guez says of Weiner. “He has helped lots of people.”

In 2004, Weiner helped finance GVI Security Solutions, which went public in February of that year after he merged it into Thinking Tools, a failed software maker that had been a shell for four years, according to an SEC filing.

GVI attracted boldface names. Howard Safir, a former New York City Police Department commissioner, joined the board as chairman in February 2004; Weiner also joined the board that month. GVI’s shares soared two months later, jumping from 9 cents to $10.25 in a month.

John Gutfreund, the former CEO of Salomon Brothers, became a GVI board member in July 2005. At the time, Gutfreund was a managing director at investment bank C.E. Unterberg Towbin. His firm advised GVI on its 2004 sale of 22.6 million shares, which raised $33.9 million, according to a GVI filing on July 27, 2005. Unterberg got paid 7 percent of that total, or $2.4 million. Gutfreund declined to comment on the matter.

Safir, in a telephone interview, says Weiner was one of the primary investors, though he rarely dealt with him.

GVI’s stock tumbled after the initial run-up, and in December 2009, a private-equity firm bought the company for 39 cents a share. Other Weiner-financed companies that saw their shares soar before languishing include biotech startup AtheroNova. and Internet video company DigitalFX International.

Many of the same lawyers, accountants and executives turn up again and again in Weiner’s deals. Ellins, for one, did “strategic planning” for K-tel, was a board member at GVI and acted as executive chairman of GrowLife. Denkin was on the board of GrowLife, while Zapolin served as chief Internet strategist. Ellins left the GrowLife board in 2013, disillusioned, he says, with the company’s decision to move beyond the Phototron greenhouse and into pot-growing supplies. “They call themselves a marijuana company? All that shit is sold cheaper every day in the garden supply store,” Ellins says.

His new company, GrowBlox, was born out of a reverse merger with Signature Exploration & Production in Houston.

Unlike Weiner, who prefers to stay in the background, Ellins, Denkin and Zapolin plug their companies by attending events such as the prestigious Milken conference. Another panelist at the pot session, Sue Rusche, CEO of National Families in Action, an Atlanta group that strives to keep drugs away from kids, says that when the men took the stage, “they all said this was a great day for the industry.”

Both Zapolin and Ellins put out press releases advertising their attendance, and both made pitches for their new marijuana companies, keeping the great marijuana stock promotion machine rolling along.

With assistance from Daniel Taub in Los Angeles and Michael Weiss and Michael Novatkoski in Princeton, N.J.