MJLink’s motion to dismiss $1.7M fraud suit largely rejected | Where to buy Skittles Moonrock online

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A federal magistrate judge recommended that fraud and securities claims should proceed in a lawsuit against cannabis social network MjLink.com and its parent company over allegedly inflated user metrics.

U.S. Magistrate Judge Scott T. Varholak found that investor Alan Lamothe sufficiently alleged that executives made “fraudulent statements concerning the business operations and metrics” of their platforms, according to Colorado federal court filings obtained by Law360.

The case centers on Colorado-based Decentral Life Inc. (OTC: WDLF), which provides social networking and e-commerce platforms through several subsidiaries. During a February 2021 shareholder podcast, executives claimed MjLink’s “usership grew to 5,681,966 MAUs (monthly active users) in December 2020.” However, the complaint alleges the platform “had at most 25,000 MAUs” at that time.

Following the podcast, Lamothe invested heavily, purchasing nearly 60 million shares worth about $1.4 million in February 2021 alone, eventually reaching over $1.7 million across “at least 95 transactions,” according to court filings.

The judge rejected several defense arguments in his recommendation. Due to executives Ken Tapp and Gregory Todd Markey holding leadership positions across all defendant companies, their statements could be attributed to all entities. The timing of Lamothe’s initial stock purchases — made just days after the podcast — helped establish “plausible” reliance on the alleged misrepresentations.

While finding the statements went beyond “optimism or puffery” by using “specific, numerical data,” the judge recommended dismissing two claims: civil conspiracy, because corporate officers cannot legally conspire with their own companies under Colorado law, and consumer protection claims, as securities transactions fall outside that statute’s scope. Tapp has led several Decentral companies while Markey is president of both Decentral and MjLink.

According to the original complaint, a $50 million Regulation A offering was withdrawn after the SEC requested documentation supporting user metrics claims. Subsequent attempts to uplist to NASDAQ were unsuccessful.

Third-party analytics from Semrush showed MjLink last year saw around 1,400 monthly visits, according to earlier reporting from Green Market Report.