In this file photo, jars display varieties of marijuana for sale on shelves at a retail and medical cannabis dispensary in Boulder. (Brennan Linsley, The Associated Press)

FusionPharm owners face federal securities fraud charges

The U.S. Attorney’s Office for Colorado on Thursday charged Thornton resident William Sears, 50, and his brother-in-law, Scott Dittman, 47, formerly of Elizabeth, with conspiracy to defraud by passing off money from illegal stock sales as product sales.

The two owned and ran FusionPharm Inc., a Commerce City company that promoted a triple green play — profits from the conversion old shipping containers into greenhouses, primarily to cultivate cannabis, which has struggled with a shortage of indoor space available for commercial-scale grow facilities.

But the U.S. Securities and Exchange Commission said Friday the two illegally sold restricted FusionPharm shares issued to three companies that Sears controlled, misleading brokers and raising $12.2 million. Some of that money was funneled back to FusionPharm and reported as revenues from the sale of the company’s PharmPods containers.

Investors, duped into thinking the company’s financial condition was stronger than it actually was, pushed up the share price, which got as high as $8.70 on March 5, 2014, the SEC said.

“Sears and Dittman misled investors by recording and trumpeting revenues for purported sales of PharmPods when they were really just round-tripping money from illegal stock sales by hidden affiliates,” Julie Lutz, director of the SEC’s Denver regional office, said in a statement.

The disputed stock sales and transfers occurred from April 2011 to May 2014.

Sears, who exercised control of the company from behind the scenes, and Dittman, who was officially the CEO, hired a third person, Cliffe R. Bodden, to help them create fraudulent corporate documents, the SEC said. A Manhattan judge in February 2013 sentenced Bodden to 74 months in prison in a separate scheme to defraud investors.

Sears, Dittman, and Bodden all agreed to settle the civil charges in return for monetary sanctions that will be determined at a later date, the SEC said. They also agreed to a ban from participating in any future penny-stock offerings.

Sears and Dittman are permanently barred as serving as an officer or director of any public company and Dittman, who now lives in Pennsylvania, agreed not to work as an accountant on behalf of any public companies, the SEC said.

Assistant U.S. Attorneys Kenneth Harmon and Tonya Andrews will head up the criminal case against Sears and Dittman.

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