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Two New Jersey Men Plead Guilty To Defrauding Investors In Hemp Company


Vitaly Fargesen and Igor Palatnik Misappropriated Approximately $4 Million of Investor Funds


Damian Williams, the United States Attorney for the Southern District of New York, announced today that VITALY FARGESEN and IGOR PALATNIK each pled guilty to one count of conspiring to commit securities fraud and one count of conspiring to commit wire fraud in connection with their fraudulent scheme to defraud investors in CanaFarma Corp. and later CanaFarma Hemp Products Corp. (together “CanaFarma”) by soliciting funds based upon false and misleading representations, failing to invest investors’ funds as promised, and secretly misappropriating millions of dollars of CanaFarma funds. FARGESEN and PALATNIK pled guilty today before U.S. District Judge Loretta A. Preska.

U.S. Attorney Damian Williams said: “Vitaly Fargesen and Igor Palatnik orchestrated a sophisticated scheme to obtain millions of dollars from investors with the promise that their money would be spent on building a legitimate company. Instead, they lied about their business, lied to their auditors, and stole millions of dollars of investor funds. Today’s guilty pleas reflect my Office’s commitment to prosecuting those who greedily lie to investors to line their own pockets.”

According to the allegations contained in the Indictment and statements made in public filings and in public court proceedings: From in or about March 2019 to in or about March 2020, CanaFarma was a privately held Delaware corporation with offices in New York, New York. Beginning on or about March 19, 2020, CanaFarma was listed on the Canadian Stock Exchange, and beginning on or about March 23, 2020, CanaFarma was listed on the Frankfurt Stock Exchange. CanaFarma marketed itself to the investors as a “fully integrated cannabis company addressing the entire cannabis spectrum from seed to delivery of consumer products.” To the public, FARGESEN was held out as Senior Vice President of Strategic Planning at CanaFarma and PALATNIK was held out as Senior Vice President of Product Acquisition at CanaFarma. In truth, the two men exercised full control of CanaFarma but hid their control from the investing public by, among things, convincing an experienced businessman to falsely present himself to the market as the CEO of the company. Using their control of CanaFarma, FARGESEN and PALATNIK devised and carried out a scheme to defraud CanaFarma’s investors by soliciting approximately $14 million in funds, including investments in private shares of CanaFarma, with false and misleading representations concerning the company’s management, products, and financials; failing to invest investors’ funds as promised; and secretly misappropriating at least $4 million of CanaFarma funds for their own benefit. FARGESEN and PALATNIK effectuated the scheme by, among other things, controlling CanaFarma through a nominal Chief Executive Officer who reported to FARGESEN and PALATNIK, lying to investors regarding CanaFarma’s actual and anticipated operations, attempting to artificially inflate CanaFarma’s reported revenue, making false statements to CanaFarma’s auditors, and misappropriating millions of dollars of investor funds. * * * FARGESEN, 54, of Manalapan, New Jersey, and PALATNIK, 49, of Morganville, New Jersey, each pled guilty to one count of conspiracy to commit securities fraud and one count of conspiracy to commit wire fraud, which combined carries a maximum sentence of 10 years in prison. The maximum potential sentence is prescribed by Congress and is provided here for informational purposes only, as any sentencing of the defendants will be determined by the judge. FARGESEN is scheduled to be sentenced by Judge Preska on January 30, 2024, at 10:00 a.m., and PALATNIK is scheduled to be sentenced by Judge Preska on January 11, 2024, at 11:00 a.m. Mr. Williams praised the outstanding work of the Federal Bureau of Investigation. Mr. Williams also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action. The case is being overseen by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Margaret Graham, Adam Hobson, Sarah Mortazavi, and Andrew Thomas are in charge of the prosecution.




ContactNicholas Biase (212) 637-2600

Updated October 10, 2023

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