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by Mike Caswell

Vitaly Fargesen and Igor Palatnik, the founders of Vancouver's Canafarma Hemp Products Corp., have pleaded guilty to criminal charges in New York. Prosecutors claimed that they misappropriated money through bogus consulting agreements, while lying to investors about the company's prospects. The men took millions of dollars through the scheme, according to the government.

The pair entered their guilty pleas in appearances before a federal judge in New York on Tuesday, Oct. 10. The charges to which they pleaded guilty are conspiracy to commit securities fraud and conspiracy to commit wire fraud. The men remain on bond while they await sentencing. (Mr. Palatnik recently confirmed that the conditions of his bond, which include home confinement, allow him to go into his yard so he can smoke and walk his three dogs.) Prosecutors have not yet submitted any sentencing recommendations for the men.

The guilty pleas come just over two years after the charges against the men became public, with New York prosecutors and the U.S. Securities and Exchange Commission filing parallel criminal and civil actions against them on Oct. 5, 2021. The SEC identified the men as residents of New Jersey who took Canafarma public in March, 2020, through a merger with a Canadian Securities Exchange shell. The company claimed to be developing a hemp chewing gum.

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