Cannabis App Scam! Millions Siphoned to Casinos, Not Cloud!

SEC v. David A. Spargo, CannaCloud, Inc., D.A. Spargo & Co. LLC — U.S. Securities and Exchange Commission Litigation Release No. 26297, dated April 29, 2025.

The SEC charged David A. Spargo and his companies, CannaCloud, Inc. and D.A. Spargo & Co. LLC, with defrauding approximately 33 investors out of at least $1.65 million. Spargo falsely promised high annual returns for an app development scheme but instead used investor funds for personal expenses and at casinos. Final judgments were entered against the defendants, ordering disgorgement, interest, and civil penalties.

In Plain English

Imagine someone promised you a great return on your investment if you helped fund their new app. They said the money would be used to build the app, and you'd get your money back with a good profit. But instead of building the app, they took the money and spent it on themselves, like going to casinos or buying personal things. The SEC stepped in and made them pay back the money they took and also pay a fine.

Disclaimer: all facts are drawn from the SEC's own filings; the claims described are allegations unless and until a court rules or the parties settle, and some cases end in dismissal.

How the Alleged Scheme Worked

1. The Pitch David A. Spargo, through his companies CannaCloud, Inc. and D.A. Spargo & Co. LLC, told investors he was developing a cannabis app. He promised them a 20% annual return on their investment.
2. False Promises Spargo presented an investor presentation showing CannaCloud had a 40% net profit margin and a $7.25 billion valuation, making the investment seem very secure and profitable.
3. Investor Funds Raised Between February 2021 and December 2021, Spargo successfully raised at least $1.65 million from approximately 33 investors.
4. Misappropriation of Funds Instead of using the money to fund CannaCloud's business, Spargo spent investor funds at casinos and on his personal expenses, including cash withdrawals and transfers to his wife's bank account.
5. Continued Deception While misusing the funds, Spargo continued to tell investors that CannaCloud's business was doing well and that the company was about to be sold to a wealthy buyer.
6. Company Collapse CannaCloud is now defunct, with approximately $1.5 million of investor funds having been misappropriated by Spargo.

The Enforcement Action

SEC charged David A. Spargo, CannaCloud, Inc., and D.A. Spargo & Co. LLC with defrauding investors in a cannabis app investment scheme. Spargo promised investors a 20% annual return, but instead used investor funds for personal expenses and at casinos. The SEC obtained final judgments against the defendants, permanently enjoining them from violating securities laws. Spargo was ordered to pay disgorgement of $1,504,559 with prejudgment interest of $313,449, a civil penalty of $230,464, and is prohibited from serving as an officer or director of a public company. CannaCloud and D.A. Spargo were ordered to pay disgorgement of $1,504,559 plus prejudgment interest of $313,449, jointly and severally.

Named in this action: David A. Spargo, CannaCloud, Inc., D.A. Spargo & Co. LLC.

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