In the meanwhile, though, Mehdizadeh used the fake proceeds to buy a luxury home in the Pacific Palisades. 

The SEC further charged the company's then-CEO Bruce Bedrick with being complicit in the scheme and, in fact, personally profiting from it. The SEC also charged New-Age and Mehdizadeh’s then-fiancée Yocelin Legaspi with unlawfully selling unregistered securities. Mehdizadeh installed Legaspi as the supposed CEO of New-Age when he created the company.

“As alleged in our complaint, investors were misled into believing that Medbox was a leader in the burgeoning marijuana industry when the company was just round-tripping money from illegal stock sales to boost revenue,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. 

Mehdizadeh and Medbox, which has since changed its name to Notis Global, have agreed to settle the SEC’s charges. Mehdizadeh agreed to pay more than $12 million in disgorgement and penalties and agreed to be barred from serving as an officer or director of a public company or participating in any penny stock offerings. The settlements are subject to court approval. The SEC’s litigation continues against Bedrick, Legaspi, and New-Age.