Reno marijuana dispensary at center of fraud scheme, lawsuit says

A Reno marijuana dispensary is at the center of a multimillion-dollar fraud scheme, according to attorneys behind a case filed in Washoe District Court.

Heidi Loeb Hegerich, co-owner of Blüm dispensary in Midtown, alleges that her business partners at California-based Terra Tech took advantage of her and have been skimming millions of dollars from the dispensary profits. The funds are being funneled to the company’s other ventures, some of which are failing, the lawsuit said…

Reno marijuana dispensary at center of fraud scheme, lawsuit says
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The lawsuit, filed in late November, includes 50 claims of fraud, conspiracy, elder abuse and other charges.

“It’s devastated every aspect of her life, and some of it is the realization that the people she trusted most betrayed her confidence,” said Mark Simons, attorney for Loeb Hegerich.

The company called the claims “meritless” Tuesday in a press release that described Loeb Hegerich as a “wealthy, sophisticated investor with a history of disputes with business partners.” 

“The real victims here are the 120,000+ Terra Tech shareholders who may have suffered losses from their investment in the company as a result of her spurious accusations,” the statement said. 

The company’s stock was down more than 23 percent Tuesday afternoon on the NASDAQ stock exchange. 

Terra Tech executives and Loeb Hegerich, a local philanthropist and widow of the Wingfield Springs developer David Loeb, opened Blüm’s Reno location in January 2017, just six months before the advent of Nevada’s legalization of recreational marijuana.

Terra Tech, based in Newport Beach, Calif., is a publicly traded company that owns the Blüm chain, also operating dispensaries in California and Las Vegas. 

Loeb Hegerich invested in the company because, as a grandmother, she knew that a portion of state marijuana taxes would go toward Nevada schools, according to the lawsuit.

Terra Tech has used the success of the Blüm operation to keep its other ventures afloat, according to the lawsuit, though documents did not specify which locations the money was allegedly funneled to.

Loeb Hegerich also alleges the company has avoided paying her rent and has falsified loans that she never received, according to the lawsuit. 

The lawsuit additionally points to Terra Tech’s own quarterly reports, one of which stated in May that internal controls over finances were “deficient” and “incomplete.”

Although executives assured Loeb Hegerich that the company was regularly audited, she later discovered that the company was subject only to internal finance review and that the finance team was rather inexperienced, according to the lawsuit.

Loeb Hegerich’s lawsuit also pits her against her longtime personal assistant, Mikel Alvarez, and his husband, Garrett Alvarez.

Mikel Alvarez was positioned to manage the Reno location, but instead took on a position managing all of Terra Tech’s dispensary locations, according to the lawsuit. Alvarez helped reallocate money from the Reno location to Terra Tech, according to Loeb Hegerich.

“On behalf of the Alvarez Family Trust, Garrett Alvarez and myself, on the advice of council, we have no comment on this matter,” Mikel Alvarez said in a text message Tuesday to the Reno Gazette Journal.

The case may or may not inspire Loeb Hegerich to leave the cannabis industry altogether, according to her attorney.  

“It’s the same type of wrongful business conduct that can happen in any business,” Simons said. “The industry is moving so rapidly, and the businesses that are coming into the industry — and the characters coming into the industry — are not necessarily those you want to do business with.”

Published December 19, 2018
Jennifer Kane