Debra BorchardtThe Securities and Exchange Commission (SEC) says it is finally done with handing down judgments in the CanaFarma fraud case. According to the SEC announcement, on April 10, 2025, the U.S. District Court for the Southern District of New York entered final judgments against Frank Barone and Kirill Chumenko, both former Senior Vice Presidents of Sales & Marketing at CanaFarma Hemp Products Corp.
Green Market Report wrote in September that the SEC had handed down a final judgment against Co-founder Vitaly Fargesen for his role in the CanaFarma scheme. In 2021, Fargesen was criminally charged on October 5 by the U.S. Attorney’s Office for the Southern District of New York with securities fraud, wire fraud, and conspiracies to commit both securities fraud and wire fraud in connection with the CanaFarma investment offering.
The SEC alleged that, in 2019 and 2020, Barone and Chumenko, along with CanaFarma and its two co-founders, Fargesen and Igor Palatnik, raised millions of dollars from investors. The SEC claims that the executives told investors the money would be used to operate CanaFarma. They say that Fargesen and Palatnik allegedly made misrepresentations to investors, including claims that CanaFarma was a fully integrated company that was processing hemp from its farm, when in fact it had not processed any hemp and its products used hemp oil supplied by third parties.
The complaint was amended in 2023 and the new complaint alleged that Barone and Chumenko, at the direction of Fargesen, made unsupported changes to CanaFarma’s financial model in order to disguise an expected series of payments to Fargesen and Palatnik. Additionally, the SEC stated that the amended complaint alleged that Fargesen and Palatnik – in some instances with the assistance of Barone and Chumenko – misappropriated at least $4 million of investor funds.
According to the court’s decision, Barone and Chumenko agreed to be permanently barred from serving as officers and directors and faced being barred from penny stocks for five years.
On November 14, 2024, the SEC said it voluntarily dismissed its complaint against CanaFarma. The SEC said these final judgments for Barone and Chumenko conclude the SEC’s litigation in this matter.
