The fraud came to light partly through litigation between Fanta, Leonowicz, and Ownbey. In that case, Ownbey claimed he had invested $1 million in the dispensary and covered its operating expenses, while Fanta and Leonowicz invested nothing. He also alleged he was unaware of 5 Guys’ investment or ownership share. Conversely, Fanta and Leonowicz accused Ownbey of withholding financial information, raising questions about the authenticity of profit-and-loss statements provided to 5 Guys.
Legal Actions and Counsel
5 Guys claims it has recovered only $250,000 of its $1.5 million investment. It is suing for damages, alleging fraud, breach of fiduciary duty, and other misconduct.
The plaintiffs are represented by Mark S. Demorest and Michael K. Hayes of Demorest Law Firm PLLC. Counsel for the defendants was not immediately available for comment.
Broader Implications
The lawsuit underscores the risks associated with investments in the emerging cannabis industry, where regulatory challenges and financial transparency remain concerns. If the allegations are proven, the case could serve as a cautionary tale for investors navigating this growing but volatile market.
