Fake cannabis billionaire pleads guilty to securities fraud
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A man who posed as a cannabis billionaire pleaded guilty Wednesday to securities fraud for lying to investors about his wealth, education and business.
Justin Costello, 42, of Las Vegas, admitted his guilt in defrauding investors of his two companies, GRN Holding Corp. and Hempstract Inc. As part of a plea agreement, Costello will pay $35 million in restitution and could face up to 10 years in prison.
According to the Justice Department, Costello falsely told private investors that he had an master's degree in business administration from Harvard and that a private equity fund he owned had over $1 billion in assets.
As a result, from July 2019 to May 2021, more than 7,500 investors purchased securities in GRN Holding. Collectively they lost $25 million. From November 2018 to June 2021, 29 private investors lost $6 million from investments in Hempstract, the Justice Department said.
Costello also participated in a pump and dump scheme over Twitter in which he instructed an unindicted co-conspirator to tweet falsehoods about a company, thereby driving up its stock price. Costello made more than $625,000 from the pump and dump scheme, prosecutors said.
Costello was arrested in October in Southern California while carrying fake identification documents, cash and valuables, as he attempted to flee to Mexico, officials said.
As part of his plea deal, prosecutors have agreed not to file charges against his wife "for any offenses known."