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Perhaps no other name has personified the pot stock boom and bust more so than Hemp Inc (OTCMKTS:HEMP) CEO Bruce Perlowin. He relished his role as the “King of Pot” and touted his background as a former drug smuggler who served nine years in prison. Well, it seems he never outgrew his old ways as the SEC charged Hemp Inc, Bruce Perlowin, and others with a “long-running and profitable scheme resulted in the sale of hundreds of millions of unregistered and purportedly unrestricted Hemp shares to public investors. The execution of this scheme involved, among other things, purported gifts and consulting agreements that do not appear to have been bona fide and fraudulent statements made to Commission-registered broker-dealers.”

While Bruce Perlowin and his associates were enriching themselves, shareholders of Hemp have been devastated resulting in tens of millions of dollars of losses. Here is the long-term chart of Hemp and you can see the damage done.

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The sad part is that Hemp was actually making some progress. Last month and after months of waiting, Hemp Inc finally produced its first environmentally friendly product-to-market from the company’s new decortication plant in Spring Hope, North Carolina. This was a pretty big deal for HEMP and its investors as the company has basically bet the ranch on this plant and the state of North Carolina. We told investors back in February that the company was making a comeback and things were finally starting to come together.

Getting product to market was indeed the first step for HEMP. We have been critical of the company at times in the past due to its endless stream of press releases built on hype and very little substance. Finally, the company put out one that had nothing to do with legislation in other states or anything else to do with hype surrounding the benefits of hemp and its market potential. The problem as we later found out came from one of our loyal readers Rolling O Research who said:

While HEMP may now be able to bag milled kenaf that the company received when it bought the plant at a bankruptcy auction, the decorticator isn’t running yet, they’ve made no mention of the start of the assembly of the MacTavish line that separates decorticated kenaf core from various impurities, nor has it actually assembled the mill. Knowing how HEMP issues videos on just about everything it does, we’ve yet to see videos showing any progress on the MacTavish or milling portion of the plant (except for the installation of the silo). We have also not seen evidence of the installation of any of the thousands of feet of ductwork that both keeps dust out of the air and moves material around the plant. No, HEMP is working hard to give the impression that the plant is somewhat operational, but once they package the SpillSuck they have on hand, they won’t be able to make more for quite awhile, because the plant isn’t close to full operation. They put out PRs and videos on every little milestone, yet they’ve stopped discussing progress on the decorticator and never mentioned starting reassembly of the MacTavish line, and have shown no photos of the milling machinery beyond the silo. Each of the two remaining phases were estimated to take 60 – 90 days each.

Currently trading with a market cap of $11 million, Hemp and Perlowin are facing numerous fraud charges from the SEC. With just $755k in total assets, we don’t see how the company can fight the SEC and upcoming shareholder lawsuits. Perlowin will most likely be banned from the industry and it will be a battle to collect funds from him. Even if the argument is that shares were sold into the market and used to fund Hemp operations, shareholders did not benefit as Hemp and Perlowin burned through money like water. In the past three years, Hemp posted combined losses of more than $12 million. At the current time, we don’t see how this ends well for Hemp shareholders. All we can say is don’t be left holding the bag and to get out while you still can.

We will be updating Insider Financial as soon as we know more. For continuing coverage on HEMP, sign up for our free newsletter today and get our next hot stock pick!

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Disclosure: We have no position in HEMP and have not been compensated for this article.