Jan. 22 (UPI) — Former Verano Executive Vice President Anthony Marsico allegedly used and shared insider information to buy shares in a Minnesota cannabis producer prior to its planned takeover by Verano in 2022.
The Department of Justice accuses Marsico, 39, and co-defendants Arthur Pizzello Jr., 61, of Wayne, Ill.; Robert Quattrocchi, 63, of Schaumburg, Ill.; and Timothy Carey, 57, of Hanover Park, Ill., of using insider information to buy shares in Minneapolis-based Goodness Growth Holdings Inc., which now is named Vireo Growth Inc., from December 2021 until Jan. 28, 2022.
Marsico, Pizzello, Quattrocchi and Carey are good friends and frequently golfed together, which enabled Marsico to allegedly share the insider information with the co-defendants while on the golf course, the DOJ said Tuesday in a news release announcing the prosecution.
As an executive vice president of Chicago-headquartered Verano, Marsico was privy to confidential information regarding Verano’s proposed takeover of Goodness Growth, the DOJ says in the complaint filed Thursday in the U.S. District Court for Northern Illinois’ Eastern Division in Chicago.
Goodness Growth sold its shares on the Canadian stock market and on over-the-counter stock platforms in the United States.
The indictment states Marsico knew Verano and Goodness Growth officials had reached an agreement on the takeover and were to announce the pending transaction on Feb. 1, 2022.
Upon making the announcement, the share price for Goodness Growth rose by 42% to $2.34, the DOJ says.
Marsico bought 906,934 shares of Goodness Growth stock in 359 separate transactions from Dec. 8, 2021, until Jan. 28. 2022, at a total cost of $1.46 million, the DOJ says.
After buying the shares, the DOJ says Marsico “paid others to post messages on various social websites promoting [Verano’s] stock in order to increase demand for and thus the share price of [Verano’s] stock.”
Increasing Verano’s share price meant it would have to contribute fewer shares to buy Goodness Growth. Verano is one of the nation’s largest producers of cannabis.
The deal eventually fell through, but Marsico sold his shares in Goodness Growth prior to Oct. 14, 2022, when Verano and Goodness Growth publicly announced they canceled the proposed takeover.
Marsico generated a profit of $607,338 from the alleged insider trading scheme, the DOJ says.
Marsico allegedly shared the information with the three co-defendants, who also bought shares in Goodness Growth, but only Quattrocchi generated a profit among those three by selling his shares within two days to turn a profit exceeding $26,000, according to the DOJ complaint.
Pizzello held his Goodness Growth shares for too long and lost $113,662, while Carey did not sell his shares prior to a Securities and Exchange Commission filing on the matter, the DOJ says.
A federal grand jury in June indicted Marsico, Pizzello, Carey and Quattrocchi.
Marsico has denied the insider trading-related charges against him.
“Mr. Marsico had a long-term and well-documented history of investing in the cannabis-related financial sector,” Marsico’s attorneys, Patrick Blegen and Todd Pugh, told the Chicago Tribune.
“Our investigation shows that Mr. Marsico’s investment activity was based solely on public and non-proprietary information,” his attorneys said.
Marsico, Pizzello, Quattrocchi and Carey are charged with conspiracy to commit securities fraud. Marsico also is charged with six counts of securities fraud.
The DOJ seeks a $634,816 forfeiture from Marsico for all profits and assets obtained from the alleged insider trading if he is convicted of the charges against him.
The defendants have not been arraigned and are innocent until proven guilty.
