William Galvin, Massachusetts' top securities regulator.
Massachusetts Secretary of State William Galvin, the state's top securities regulator, charged an investment advisor representative who oversaw the solicitation of millions of dollars from more than 100 investors in order to fund various medical marijuana ventures.
However, no licenses were ever acquired in Massachusetts and no dispensary was ever opened.
Frederick McDonald Jr., CEO of the investment advisor US Advisory Group Inc., funded several of his ventures through one high-net-worth client, who lost more than $3 million due to McDonald's activities.
Collectively, investors lost control of more than $8 million in assets, while seeing no returns on their investments, according to the administrative complaint filed by Galvin's Securities Division.
The Massachusetts Securities Division accuses McDonald of failing to disclose key risk factors in the cannabis industry, withholding information about his own conflicting interests in the investments he was recommending, concealing crucial information from the investors, and breaching his fiduciary duty to his client.
"McDonald failed to educate himself regarding the unique and complex licensing process in Massachusetts, which resulted in the distribution of offering documents that failed to adequately disclose to investors the risks or difficulties the investment could face," the complaint says.
