Illinois-based 5 Guys Management Inc. is suing Michigan cannabis companies Great Lakes Holistics Muskegon (GLH) and Redbud Roots Inc., along with their directors, alleging the defendants orchestrated a $1.5 million investment fraud involving a failed dispensary. The lawsuit, filed in Michigan federal court, accuses company officers of misrepresentations and misusing funds, leading to the venture’s collapse.
Allegations of Misrepresentation and Fraud
The complaint centers on a Muskegon dispensary located on W. Laketown Avenue. Christopher Fanta and Alex Leonowicz, directors of GLH and Redbud Roots, allegedly persuaded 5 Guys to invest $1.5 million for a 22.5% ownership stake in the business. According to 5 Guys, the defendants withheld critical information, including the fact that the dispensary had previously failed under their operation.
Fanta and Leonowicz allegedly used incomplete and misleading documents, such as a private placement memorandum, to entice the investment. They also purportedly fabricated profit-and-loss statements and projected lucrative buyout deals that never materialized. These included claims that a national cannabis company might acquire the dispensary for $55 million and that defendant Jacob Ownbey, a 50% owner of the dispensary, would buy it out for at least $3 million.
Dispensary Collapse and Alleged Deception
Despite these promises, the dispensary abruptly closed in February 2023, two weeks after 5 Guys was told it was worth $6 million to $10 million. The lawsuit also alleges Fanta and Leonowicz conducted a sham “forensic audit” of the dispensary’s financials to mislead investors, but no audit report was ever produced.
