Former Left Coast CEO wants court receiver to work on frozen funds

The former head of a failed marijuana payment processor claims dozens of businesses owe money and is urging a federal court not to award remaining funds to a single company seeking repayment.

Briefly led by Dominique Villela Left Coast Financial Solutions listed in court documents as interim CEO achieved It was reported by Law360 last week that approximately 64 cannabis companies never got their deposits back after the platform’s collapse. CBD company opposed in application Killa Beez DistributionHe made an offer to get back $127,000.

“Equitable distribution of these funds, court appointed receiverIt was necessary to ensure that all plaintiffs were treated fairly, Villela wrote in the filing.

The payment platform company marketed itself as an online “neobank” service for cannabis companies, but operated under a money transmitter license rather than a bank charter. Its main accounts were held at City Trust Bank in the Commonwealth of the Northern Mariana Islands, where former managers Daniel Herrington and Casey Nye-Herrington remain the main account holders.

According to court documents, City Trust Bank froze those accounts because of repeated bounced checks, failure to comply with banking rules in the Northern Mariana Islands where the accounts were held, and providing banking services only when it had permission to transfer money.

The Oregon Division of Financial Regulation suspended Left Coast’s license in January 2023, citing reporting failures and “inadequate” net worth. based on To the Portland Business Journal. regulatory layout noted Issues related to previous ownership, including overdrawn accounts and checks returned for insufficient funds.

According to the filing, the Herringtons admitted to mistaking customer deposits for business funds, with estimated losses ranging from $900,000 to $1.2 million. Villela said he was brought in as interim CEO in October 2022 to investigate financial issues, but former leaders never handed over control of City Trust Bank accounts despite their alleged resignations.

“Former leadership remained in control while defrauding other businesses (including Killa Beez) and using Defendant’s settlement to conceal their liability for the company’s bankruptcy,” Villela said.

Left Bank’s additional problems became public when Killa Beez filed a lawsuit in November 2023. The CBD company claimed that numerous checks had bounced, including a $30,000 withdrawal attempt. His lawsuit named several executives, including company founder Nicholas Rupp.

Rupp Request for dismissal was made Discussing founder status in a separate application does not create personal liability. He blamed City Trust Bank for freezing the funds despite compliance efforts.

A federal judge will consider Villela’s request for a forensic audit and appointment of counsel before proceeding with any claims. Incomplete financial records complicate efforts to determine exactly how the funds will be distributed, according to court documents.

The case is pending in U.S. District Court in Oregon.

Left Coast vs Killa Beez