Planet 13 wins incremental victory in Casa Verde fraud lawsuit

Planet 13 wins incremental victory in Casa Verde fraud lawsuit

Nevada-based Planet 13 Holdings (CSE: PLTH) (OTCQX: PLNH) won an incremental but significant legal victory in a lawsuit attempting to recover $16.5 million plus damages from investment firms Casa Verde Capital and El Capitan Advisors. The state judge overseeing the case approved an injunction and a special purpose receiver against the defendants, Planet 13 leadership shared in its earnings call this week.

Planet 13 “obtained emergency equitable relief, which includes the appointment of a special purpose receiver to locate Planet 13’s funds and an injunction to prevent further embezzlement and to assist Planet 13 in securing its funds and other compensatory damages,” co-CEO Robert Groesbeck said during the call.

The installment of a special receiver was just one of several legal requests Planet 13 made in the case, which is working its way through Los Angeles County Superior Court. Another hearing is scheduled for April 29.

The lawsuit was filed in January after El Capitan Advisors, an asset management firm registered with the U.S. Securities and Exchange Commission, and longtime investment partner Casa Verde Capital came under fire for alleged fraud.

Casa Verde has denied all wrongdoing and said the blame belongs to El Capitan and its founder and CEO, Andrew Nash, another of the defendants in the lawsuit brought by Planet 13.

While $3.4 million has already been returned to Planet 13, with $2 million in the pipeline, another $16.5 million is still in limbo, Groesbeck said.

The receiver’s aim is to ensure that funds misappropriated by El Capitan Advisors – which was backed by Casa Verde and its CEO, Karan Wadhera – are properly returned to clients, including Planet 13.

Planet 13 alleged in the January lawsuit that El Capitan and Casa Verde conspired to defraud various clients – including themselves – before Casa Verde cashed out last year with a $35 million default court judgment of its own against El Capitan.

Meanwhile, the lack of access to its $16.5 million led Planet 13 to conduct an $11 million equity raise in early March to ensure that its entry into the Florida cannabis market and its expansion plans in Nevada would continue smoothly, Groesbeck said.

“We know that the legal recovery process can take time. And given the scale of opportunity in front of us in Florida, we thought it prudent to do a capital raise to reinforce our balance sheet and make sure we had the funds required and available to execute on that opportunity along with the optionality to add more scale in Nevada and to increase profitability,” Groesbeck said.

Planet 13’s cash position on New Year’s Eve was just $17.3 million, CFO Dennis Logan also noted in the call.

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