Marijuana entrepreneur fined $50K for securities violations

  • David Caputo of Holyoke, speaks at a Cannabis Control Commission meeting in October 2017.  GAZETTE FILE PHOTO/CAROL LOLLIS

Staff Writer
Published: 11/18/2019 4:19:07 PM

HOLYOKE — A Holyoke man who founded a company nearly three years ago to cultivate recreational marijuana faces a $50,000 state fine for allegedly selling $1.3 million in unregistered securities to about 40 investors.

The secretary of the commonwealth’s office reached a consent order last week with David Caputo, who founded Positronic Farms in January 2017, detailing the securities violations.

Caputo, 55, had planned to covert an old paper mill into a cultivation facility at 5 Appleton St. According to the secretary of state’s office, he sold the securities to unaccredited investors — more than half of whom are from Massachusetts — between January 2017 and September 2018, when he stepped down from Positronic Farms. The company’s entire board resigned last month, according to a published news report.

It’s against the law to sell or attempt to sell to the public financial securities — stocks, bonds and notes — before they are registered with the Securities and Exchange Commission. An unaccredited investor is an investor who does not meet the income or net worth requirements set by the SEC. Unaccredited investors have less than $1 million in assets, outside of their primary residence, and an annual income below $200,000.

Caputo will not have to pay the fine unless his financial circumstances improve within the next five years and as long as he has not misrepresented his financial condition to state regulators, according to the conditions of a consent order signed last week.

The order states that Caputo also is barred from registering as a broker-dealer, a state-registered investment adviser or an issuer of securities. Additionally, he is required to provide written notice to the secretary of the commonwealth’s office about any securities offerings offered or originating in the commonwealth that he makes for the next 10 years.

As part of his consent order with the state, Caputo, who currently sells insurance, neither admitted nor denied the securities violations.

“I really tried to do everything right,” he said.

Caputo said he received incorrect advice from his attorney and that he was “completely unaware” of the securities violations cited by the commonwealth.

“I had a clean conscience the whole time,” he said.

Bera Dunau can be reached at bdunau@gazettenet.com.




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