After Miamian applied for PPP, Miamian bought a private jet for $ 1 million

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A photo of an airplane bought by Miami businessman Patrick Horsman following a lawsuit filed by former investors. The plane was registered with the Federal Aviation Authority the day before Horsman’s disbanded hemp business received a loan from the paycheck protection program.

Months after the business closed, a Miami businessman’s organic hemp company was approved for a federal paycheck protection program for a federal loan worth $ 150,000 to $ 350,000, according to a lawsuit filed last Friday by investors in the company .

In addition, investors claim that businessman Patrick Horsman bought a private plane for more than $ 1 million after the CBD business crashed and burned – and after applying for the loan from the program, an integral part of the state COVID-19 relief package designed to help troubled small businesses keep their employees on payroll.

The loans are waived when used on payroll and other approved expenses. The program that allowed banks to take borrowers at their word for much of the financial information they were required to provide was largely down the line viewed by experts as particularly at risk to fraud.

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Patrick Horseman

Federal data shows that one of Horsman. owned company based in Montana a Canadair Challenger 600 aircraft registered on April 28, the day before its hemp company Integrated CBD was awarded a PPP loan.

Investors say Horsman and two Integrated CBD partners misled them about the company’s prospects, conducted self-business, and used the company’s funds to pay personal expenses, including Horsman’s credit card bills.

(Horsman initially declined to comment before it was published, but after the story was published he responded first through a legal representative, then through a public relations expert, and then directly. He said the plane was bought with his own money – not through business proceeds – to protect his family during the COVID-19 pandemic.)

(He said his intentions were to go back to business and reinstate employees, but he could not do this because the creditors had frozen the company’s assets, including the PPP loan proceeds. As a result, the loan proceeds were several days repaid after filing the lawsuit. and the story was made public.)

Horsman owns two apartments on Bay Harbor Islands, including a penthouse with a private terrace and unobstructed views of Biscayne Bay, which he bought last year for nearly $ 1.6 million.

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Sunset view of the Bay Harbor Islands penthouse listing, bought by Patrick Horsman for nearly $ 1.6 million in 2019. Horsman has been accused of fraud by investors in its integrated CBD organic hemp company. Estately.com

Horsman, a seasoned investment manager specializing in connecting investors to niche investing, was 2017 from FINRA. censored, the regulator for investment brokers, for violating rules governing IPO investments and for failing to disclose several brokerage accounts for his company Blue Sand Securities in writing for several months. Horsman was fined $ 20,000 and the profits on his IPO investments were repaid and suspended for 10 days.

The hemp company was based in Arizona, and Horsman and its partners Jeffrey Dreyer and Ari Schiff announced to investors in 2019 that they had access to 10,000 acres of organic farmland that they would use to grow organic hemp and extract CBD .

The Arizona lawsuit, filed in Maricopa County, claims that Horsman’s group overestimated the amount of land they control and the quality of the land – claiming that the country was already successfully producing hemp when it was not.

In addition, investors say Horsman and its partners overestimated how much money they received from other sources, and announced in late 2019 that they had raised $ 50 million in secured debt.

But in January 2020, Horsman told investors that the company had burned all of its cash and needed more cash to continue. When investors examined the company’s financial records, they found that the company had used company funds to pay approximately $ 2 million credit card bills on Horsman’s behalf.

(Horsman responded after the story was posted online, saying the expenses on the company’s AMEX card were not his alone, provided a spreadsheet of individual settlements under various names, adding that it was definitely for legitimate business purposes .)

And investors say Horsman and his employees also made millions of dollars on a plan where companies they controlled bought the Arizona farmland that the company was supposed to use and then leased it back to the company at an inflated price .

The lawsuit alleges that Horsman fired all Integrated CBD employees by February 2020 at the latest, but still applied for and received the PPP loan in late April.

The U.S. Small Business Administration, which manages the program, said it would not comment on any pending litigation.

In early April, the company an auction planned for its agricultural and processing equipment. When asked by the Miami Herald as to whether the auction took place and was successful, the two auction companies did not respond.

One of the abandoned investors said in the lawsuit that when Horsman confronted Horsman with alleged misappropriation of funds, he replied, “[W]What do you care, you’ve only lost 50 grand? “

This article has been updated to include comments from Patrick Horsman, who declined before posting it online but did so afterwards.

This story was originally published October 6, 2020 7:30 a.m.

Ben Wieder is a data and investigative reporter for McClatchy’s Washington office. He previously worked at the Center for Public Integrity and Stateline. His work has been recognized by the Society of American Business Editors and Writers, the National Press Foundation, the Online News Association, and the Association of Health Care Journalists.


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