Dan Bilzerian transitioned his Ignite company from the legal THC cannabis sector last year, and the business now markets CBD products. (Photo courtesy of Ignite)
If Dan Bilzerian had listened to his father and not taken his marijuana company public, the brash Instagram celebrity’s Ignite International Brands might not currently be under investigation by both the U.S. Securities and Exchange Commission and the Department of Justice.
“There is no reason to have a public company unless you intend to raise capital” from public markets, as Dan Bilzerian’s father, Paul, told MJBizDaily in an interview last month.
Paul Bilzerian, who said he is now serving as an unpaid adviser to his son’s company, was speaking on behalf of Ignite because Dan was unavailable to comment.
The elder Bilzerian himself is a notorious one-time corporate raider who served time in prison for securities fraud and famously managed to hide most of a $62 million SEC judgment from being collected.
Before Ignite went private in August, investigators from both the SEC and the FBI subpoenaed the company for a vast number of documents, according to recently unsealed court records and Paul Bilzerian.
Ignite had made a brief and unsuccessful play for a share of the legal cannabis market in both the United States and Canada before public filings revealed the firm was hemorrhaging cash in ways that a later lawsuit alleged were suspicious.
The business made headlines in the summer of 2020 when mandatory public filings revealed the company had lost nearly $50 million, nearly half of which the company reported spending on “marketing and promotion.”
Dan Bilzerian has defended his company’s record, comparing Ignite to big companies such as Uber that posted big losses.
On May 20, SEC investigators served Ignite with a grand jury subpoena as part of an investigation into “a potential accounting fraud,” according to documents first unsealed Aug. 29.
“SEC staff has uncovered information that indicates that (Ignite) may have filed public financial statements that include false or misleading representations regarding revenues earned and recognized in the company’s fiscal year ending December 31, 2020,” the agency wrote in a filing.
After Ignite filed motions on Sept. 28 to delay the subpoenas, a federal judge ordered the company to comply with the subpoena and cough up documents, which it did, Paul Bilzerian said.
In its filings, the SEC mentioned that Ignite had sought to delay the agency’s subpoena while a separate criminal investigation by the Justice Department wound its course.
As for what those federal officials want, that’s anyone’s guess, Paul Bilzerian said.
“Nobody knows what the DOJ is looking at,” he said. “They don’t tell you and you don’t know.”
The Justice Department did not reply to an MJBizDaily request for comment.
An SEC spokesperson said via email only that the agency had no comment beyond public filings.
Heffernan’s lawsuit alleges that Ignite accountants flagged almost $850,000 in company expenses as more closely resembling a slush fund that served as Dan Bilzerian’s allowance for luxury spending.
Among other expenses, Bilzerian spent $50,000 on a bed frame and a half-million on a yacht rental, the lawsuit alleged. That lawsuit is still pending.
Published: October 23, 2022
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