Cannabis king raided corporate funds for luxury condo purchases: lawsuit alleges

Gia Investments claims Sunny Isles Beach-based entrepreneur Paul King skipped out on repaying a $3M loan

Miami /
Apr.April 15, 2020 03:30 PM
Cannafornia CEO Paul King, SLS Brickell (top) and Fontainebleu Miami Beach

Cannafornia CEO Paul King, SLS Brickell (top) and Fontainebleu Miami Beach (Credit: Pixabay, Ross Miami)

In Salinas, California, Paul King lords over a supposedly booming cannabis farm called Cannafornia.

But in South Florida, a recently filed lawsuit accuses the Sunny Isles Beach-based entrepreneur of reigning over an insolvent marijuana business and raiding corporate funds to buy himself two luxury condos in Miami Beach and Miami’s Brickell neighborhood.

Following the condo purchases, he allegedly refused to repay a $3 million corporate loan by claiming the promissory note outlining the terms is a forgery, according to the complaint filed last week in Miami-Dade Circuit Court by his lender, Gia Investments. In addition to King, the lawsuit names as defendants his cannabis companies Cannafornia and California New Wave, along with two separate entities that bought the condos.

“We look forward to proving the allegations in the complaint,” said Gia Investments lawyer Eric Ostroff. King and his attorney Stephen Boren did not return emails requesting comment.

According to the lawsuit, King signed the promissory note on behalf of California New Wave, a subsidiary of Cannafornia, in 2018. Gia Investments alleges both companies are insolvent and were allegedly used for an improper and fraudulent purpose by King, including failing to repay debts to creditors and making fraudulent transfers.

“King has grossly mismanaged Cannafornia and New Wave,” the lawsuit states. “He has used the companies as his personal piggybank to the detriment of their shareholders and creditors.”

For instance, King transferred $921,200 from New Wave’s corporate account to an entity called 1401 Investments 500, that then used the funds toward the purchase of a unit in SLS Lux Brickell at 801 South Miami Avenue in Miami, according to the suit. The SLS Lux condo was purchased for $997,900 on April 16, 2018.

A year later, King made another transfer for $775,000 to an entity called 803 Investments Inc. that bought a unit in the Fontainebleau Sorrento tower at 4391 Collins Avenue in Miami Beach for that same amount on Aug. 22, 2019, according to the lawsuit.

King is president and manager of 1401 Investments 500 and 803 Investments, respectively, according to Florida corporate records.

“King made the 1401 Transfers and the 803 Transfers with the actual intent to defraud his creditors, including GIA,” the lawsuit states. “King made the 1401 Transfers and the 803 Transfers at a time when he was insolvent and without receiving reasonably equivalent value in return.”

Gia Investments alleges King and California New Wave defaulted on the corporate note by failing to pay it when the loan matured on Dec. 31, 2019. In addition, King refused to mediate the dispute after Gia Investments demanded full payment last month, the complaint states.

Attached to the lawsuit is an April 1 letter from King’s lawyer, Boren, asserting his client has evidence the promissory note was forged and void. “You plainly have sufficient information at this time with which to conclude that there is no probable cause for you or GIA to pursue a meritless lawsuit,” Boren wrote. “Accordingly, any attempt by GIA to file a lawsuit that
includes knowingly false allegations will be deemed to be for an improper, fraudulent, oppressive, and/or malicious purpose.”


Related Articles

arrow_forward_ios
Mayor Daniella Levine Cava along with a rendering of the planned megaproject outside Miami-Dade County’s Urban Development Boundary (Getty, State of Florida Division of Administrative Hearings)
UDB battle not over: Megaproject opponents take fight to state
UDB battle not over: Megaproject opponents take fight to state
From left: The Trump Group's Jules Trump and Suffolk Construction's John Fish along with a rendering of the Estates at Acqualina (Photo Illustration by Steven Dilakian for The Real Deal with Getty, The Trump Group, and Weiss Serota Helfman Cole & Bierman, P.L.)
Trump Group sues Suffolk again over delays at Sunny Isles project
Trump Group sues Suffolk again over delays at Sunny Isles project
Z Capital's James Zenni Jr. with Carillon Miami Wellness Resort at 6801 Collins Avenue (LinkedIn, Google Maps)
Z Capital allegedly owes $2M legal bill: lawsuit
Z Capital allegedly owes $2M legal bill: lawsuit
Merrimac's Dev Motwan, Aria’s David Ardit and Merrimac’s Nitin Motwani with rendering of 600 Miami Worldcenter (LinkedIn, Miami Worldcenter)
Aria, Merrimac nab Miami Worldcenter site for $18M
Aria, Merrimac nab Miami Worldcenter site for $18M
Mitch Novick with rendering of Bulgari hotel (Mitch Novick, Bulgari Hotel and Resorts, Getty)
Lawsuit targets Miami Beach deal with Bulgari hotel developers
Lawsuit targets Miami Beach deal with Bulgari hotel developers
Two Roads Development’s Reid Boren and Taylor Collins with Frisbie Group’s Dave, Rick and Robert Frisbie Sr. and renderings of South Flaglar House (Two Roads Development, Frisbie Group, The Boundary with Noe & Associates, Getty)
Two Roads’ suit spells trouble for Frisbie’s West Palm condo project
Two Roads’ suit spells trouble for Frisbie’s West Palm condo project
Jon Paul Pérez with an aerial of Fisher Island (Google Maps)
Related ups ask for planned Fisher Island penthouse to $90M
Related ups ask for planned Fisher Island penthouse to $90M
Gil Dezer and a rendering of the Bentley Residences (Dezer via Sonya Revell, Bentley Residences Miami)
Dezer scores $40M loan tied to planned Bentley Residences
Dezer scores $40M loan tied to planned Bentley Residences
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...