Two former executives of CanaFarma Corp., Vitaly Fargesen and Igor Palatnik, recently pleaded guilty to fraud charges stemming from their involvement in swindling investors in CanaFarma Corp. and CanaFarma Hemp Products Corp. The guilty pleas mark a significant development in a case that has exposed a sophisticated scheme to defraud investors of millions of dollars.
Vitaly Fargesen, who served as CanaFarma’s senior vice president of strategic planning, and Igor Palatnik, the company’s senior vice president of product acquisition, each entered guilty pleas to one count of conspiring to commit securities fraud and one count of conspiring to commit wire fraud in connection with the fraudulent scheme.
The charges against the two men were initially filed last year when it was alleged that they misappropriated a minimum of $4 million in investor funds. This scheme was described by U.S. Attorney Damian Williams as “a sophisticated scheme to obtain millions of dollars from investors with the promise that their money would be spent on building a legitimate company.” Instead, the defendants were accused of deceiving investors about their business, lying to their auditors, and misappropriating millions of dollars of investor funds for personal use.
According to prosecutors, Fargesen and Palatnik leveraged their positions within CanaFarma to raise approximately $14 million in funds, including investments in private shares of the company. These funds were secured through deceptive and misleading representations about CanaFarma’s management, products, and financials. The defendants failed to invest these funds as promised and diverted them for personal gain. Their control over CanaFarma included manipulating the company’s reported financials, lying to investors about its actual and expected operations, and attempting to inflate reported revenue by providing false information to the company’s auditors.
The charges brought against Fargesen and Palatnik carry a maximum prison sentence of 10 years. The sentencing for both defendants is expected to take place in January. This case serves as a stark reminder of the consequences that individuals face when engaging in fraudulent practices that harm investors and undermine trust in financial markets.