USA: Cookies accused of using violence, threats and bribes to do business

The famous and world-renowned cannabis brand Cookies faces legal action, accused of using threats, violence and financial bribes to enrich itself at the expense of its shareholders. The lawsuit was filed by BR CO I LLC and Nedco I LLC, who claim a 10% stake in California-based Cookies.

O process names several Cookies employees, including CEO Gilbert Milam, better known as Berner, President Parker Berling, Chief Financial Officer Ian Habenicht, Board member Lesjai Peronnet Chang, and employees Michael Roberts and Omar Ortiz, claiming that they use the popularity of the Cookies brand to get involved in their own businesses and to coerce others into paying them millions of dollars in personal benefits and bribes.

The allegations of bribery and Cookies' own business

The lawsuit alleges that Cookies employees misappropriated company funds and resources to line their own pockets and that third parties who refused to pay bribes were threatened with physical violence and vilified on social media. The lawsuit also accuses Berner of accepting lavish gifts, including a $1 million piece of diamond jewelry, from clients and business partners without disclosing those gifts to shareholders.

The lawsuit alleges that Berner and Berling used their positions to negotiate side deals for several other companies they owned or had stakes in, when those deals should have benefited Cookies shareholders. One of these companies, the MeshVentures, which is one of the defendants in the lawsuit and in which Berner, Berling and others hold stakes, was a front for Cookies managers to carry out “affiliate transactions” for their own benefit, such as the payment of bad business debts of other companies .

Berling was also accused of requiring Cookie's licensing partners to use his brother's construction company, GCI, "for any building work, despite the fact that GCI cost many times more than twice the cost of other contractors, so that he could receive commissions from GCI for his own personal benefit". The lawsuit alleges that if a licensor refused to use the GCI, Berling would not allow Cookies to sign licensing agreements or do business with them.

Investors' financial concerns

The suit also accuses Berner and Berling of having recently taken out a $5 million loan from Entourage Effect Capital without the proper approval of the board of directors, which he says is another indication of his “reckless spending that is disproportionate to (Cookies') ability to pay, which leaves the company and its shareholders in a precarious position”.

Despite investors' concerns, the lawsuit alleges that Cookies' management intends to enter into a Series A Preferred Stock Purchase Agreement (SPA) worth US$23 million (approximately US$20 million 800 thousand euros), further diluting the shareholdings of shareholders. This dilution will benefit Cookies executives by allowing them to continue their widespread practice of proprietary trading and other illicit acts, the lawsuit alleges.

Cookies faces another breach of contract lawsuit

In January, Retail Cookies Products, a licensee of Cookies intellectual property in Florida, filed a breach of contract lawsuit against Cookies. The lawsuit alleged that Cookies executives tried to force Cookies Retail Products to do business with certain suppliers from whom Berling and others received commissions. The company claimed that around $1 million worth of products had been damaged by Michael Roberts.

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The lawsuit filed by BR CO I LLC and Nedco I LLC against Cookies and its management team paints a worrying picture of financial misconduct and abuse of power. The allegations of threats, violence and bribes used to enrich themselves at the expense of the company and its shareholders are serious and require a thorough investigation.

Both lawsuits are still pending, with the Florida utility lawsuit scheduled for a June 22 hearing in Los Angeles Superior Court, and the latest BR CO I LLC and Nedco I LLC lawsuit scheduled for a June 28 hearing. June in the same court. It remains to be seen what the court's decision will be and what impact both cases will have on Cookies' future as a global cannabis brand.