High Times Magazine Executive Pleads Guilty in $20M Securities Fraud Scheme

High Times Holding Corp., the publisher of iconic High Times magazine, has been embroiled in a securities fraud scheme that has resulted in the founder and chairman, Adam Levin, pleading guilty to conspiracy to tout securities for undisclosed compensation. Levin's guilty plea comes after a series of charges and investigations into the company's fraudulent promotion of its securities offerings.

The scheme involved Levin and Hightimes paying more than $150,000 in undisclosed compensation to an analyst at Palm Beach Venture, an investment newsletter with subscribers nationwide. The payments were made in exchange for Palm Beach Venture publishing promotional pieces for Hightimes' securities offerings, with false disclaimers stating that neither the newsletter nor its affiliates received compensation for bringing the deal to investors. Levin also admitted to lying to the U.S. Securities and Exchange Commission (SEC) when he denied knowing that he entered into a "pay-for-play arrangement."

The fraudulent promotion scheme allowed Hightimes to raise approximately $20 million from more than 10 investor-victims, with at least $6 million in investment proceeds associated with Palm Beach Venture's promotion. Levin and Hightimes concealed the scheme by routing payments through a Canadian bank to a shell company in Canada and entering into a sham "marketing agreement." The payments were made to Jonathan William Mikula, the chief analyst and author at Palm Beach Venture, who caused the newsletter to publish promotional pieces for Hightimes' securities offerings.

The SEC has also charged Hightimes and Levin with fraudulently promoting securities during and after a Regulation A stock offering that began in 2018. The company agreed to pay more than half a million dollars to settle charges that it engaged in a scheme to deceive investors by paying undisclosed compensation for the purportedly independent recommendation from Palm Beach Venture. Levin agreed to a final judgment imposing a permanent injunction on the stock scheme, a penalty of $111,614, and a three-year ban on serving as an officer or director.

The Hightimes securities fraud scheme highlights the importance of investors being vigilant and conducting thorough due diligence before making investment decisions. The case also underscores the need for companies to maintain transparency and adhere to securities laws and regulations. As the investigation continues, investors should monitor the situation and consider the potential impact on the company's financial health and the value of its securities.