What’s in a Name? The Ongoing Saga of Medbox

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As more states have begun to legalize marijuana for medical or recreational uses, Medbox, a West Hollywood, California-based publicly traded startup, is promising investors that its machines can dispense the drug  safely and legally. In short order the company became the poster child for what investors now call “pot stocks.” It is one of dozens of startup enterprises seeking investors’ capital to legally grow, process and sell marijuana.

Southern Investigative Reporting Foundation readers will recall that Medbox‘s experience in the stock market has been volatile from the start. Its controversial founder, P. Vincent Mehdizadeh, is an entrepreneur with a background that has included a great deal of legal trouble.

To better understand Medbox’s polarizing history and where it is today, take in this review of its earliest days as a private company when it was known as Prescription Vending Machines and Mehdizadeh was on the hunt for investors.

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It was the third week of April in 2011 and Rishi Patel was on a mission: He was taking a hard look at business opportunities in the wake of Arizona’s decision to permit the sale of medical marijuana in dispensaries across the state.

To Patel’s way of thinking, selling medical marijuana would be a fantastic opportunity to earn money while offering a scientifically valid therapeutic service to people wrestling with disease.

Patel had come across an ad from Prescription Vending Machines, a company helping folks like him get into the medical marijuana business, and in short order he was in a running dialogue with the company’s founder, an agreeable and talkative fellow named Vincent Mehdizadeh. From there, it wasn’t long before Patel and a pair of friends had struck a plan to help Prescription Vending Machines land a dispensary permit in Arizona.

Just before he wrote a very large check — his father was staking him the capital — Patel did a background search on Mehdizadeh.

After getting the report, Patel was astonished to see a laundry list of crimes and lawsuits, one more serious than the other, all of which Mehdizadeh was at the center. (All involved negotiated pleas, with none of the charges resulting in a trial or jail time. The civil charges were settled after extensive negotiations.)

An irritated Patel called Mehdizadeh first thing the next morning, wanting to know why these legal woes had not been properly disclosed.

Mehdizadeh’s reaction during the call was unexpected. There was no yelling or smooth-talking; rather, he radiated a calm and sustained astonishment. He told Patel that there has been a mistake and that something somewhere is terribly wrong since he hasn’t been repeatedly sued or arrested.

Patel was dubious, having taken the precaution of using Pejman as Mehdizadeh’s given name to run the search. He was thoroughly convinced that the report was accurate. Detail after detail matched up; he was convinced that he had his man. After their conversation, Patel emailed him a copy of the background report.

But there was no angry hang-up or fumbling apology from Mehdizadeh when he called back. Instead, he told Patel he could see exactly what happened. The background search was run using the wrong name, he said, telling Patel that his formal first name is Pegah and not Pejman.

To correct the record, Mehdizadeh emailed Patel a scan of his driver’s license and another background report, from Intelius.

Shortly after the call ended, Patel opened up the files. As promised, the documents belonged to Pegah Vincent Mehdizadeh, a man from California whose spotless criminal record was the polar opposite of Pejman Vincent Mehdizadeh.

It was, as Patel was forced to concede, more than strange. Patel thought he had had the right name and was certain Vince had even mentioned the name Pejman to him, but the documents sitting right there on his laptop screen looked, for all the world, to be in good order. What’s more, Mehdizadeh called back and said he had found his birth certificate and social security card — and wanted to know if Patel needed those scans as well.

Patel felt there was nothing more he could do. He eventually shrugged off the matter and patched things up with Mehdizadeh, even if Patel wouldn’t accept that he had gotten his name so completely wrong. But he ignored the feeling and bet on his dreams, sending the check to Prescription Vending Machines for what he assumed — after plenty of sweat and hustle — would be the ticket to a good job and a meaningful life.

For a while, the process of being a medical marijuana entrepreneur proceeded apace. If things seemed to get ever more complex with delays, costs or red tape that hadn’t been discussed, well such was life.

And then in July 2011 Patel got his dispensary and within minutes knew that everything was wrong. The furniture was used, the location wasn’t what he had bargained for, and even the vaunted dispensary system he had been promised didn’t do what was advertised.

As Patel assessed the mess, an email from Mehdizadeh arrived bearing an offer to meet that weekend in Las Vegas. To help the decision-making process along, he included photographs of four strippers he had “recruited from [his] travels from Colorado to Arizona” that Mehdizadeh was proposing to meet up with as well. Mehdizadeh didn’t leave much to the imagination when he described their role on the trip as “bringing sand to the beach.”

Patel declined the Vegas junket.

In the following weeks, Patel would tell his partners, family and friends that the biggest mistake he had made, even greater than sending that big check, was that he did not trust his instincts on the basis of the background report. Because as Pejman Vincent Mehdizadeh caroused in Vegas with his four dancer friends, Patel came to the conclusion that a person is given instincts for a reason.

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The Southern Investigative Reporting Foundation’s interest in these documents was straightforward: Vincent Mehdizadeh has an acknowledged history of inventing credentials he has not earned, most notably when he posed as a law school graduate to bolster his legal referral service business.

When the foundation approached Mehdizadeh for comment, providing him with the emails and documents in question, the situation quickly got heated.

What follows is the byproduct of the collision of a host of issues: investigative reporting on a subject who was angry at the Southern Investigative Reporting Foundation’s previous reporting, the collapse of a source-reporter relationship under legal and economic duress, and the permanence of electronic communications.

Here’s how it all started:

On April 10, Mehdizadeh, after initially refusing comment, strongly denied that he had ever posed as Pegah Mehdizadeh or arranged a stripper-accompanied trip to Las Vegas. By the afternoon of April 11, he was promising to litigate against the Southern Investigative Reporting Foundation.

A lawyer Mehdizadeh retained attempted to smooth matters out and responded to submitted questions on April 15.

That is all standard in the world of investigative reporting. Where the real drama was playing out between Patel and Mehdizadeh, however, was far behind the scenes.

When the Southern Investigative Reporting Foundation provided Mehdizadeh the Pegah Mehdizadeh emails of April 10, Patel’s name and email address was removed. Despite this, Mehdizadeh insisted to the foundation that he knew the real source behind it, and that this source was demanding compensation.

While Mehdizadeh sharply denied the authenticity of the documents, Patel described the pressure from Mehdizadeh in a series of phone calls, emails and texts as “unbelievable.” Specifically, Mehdizadeh wanted Patel to email the Southern Investigative Reporting Foundation a note stating that the documents were fabricated. In turn, Patel told the foundation — and Mehdizadeh — that he viewed this pressure from him as a direct threat to him and his family.

Throughout the weekend of April 11 to April 13, Patel in a series of phone calls and texts insisted to the Southern Investigative Reporting Foundation that he sought to be protected as a source and had opposed financial inducements from Mehdizadeh. On the evening of April 11, he texted, “I got hit with a bribe again man. [You] won’t believe this.”

After a particularly heated exchange with Mehdizadeh on April 11, Patel said that if Mehdizadeh sued the Southern Investigative Reporting Foundation, he would surrender his anonymity and voluntarily testify, stating that “someone has to stop this crap. It has to end — the bad deals, dispensary owners getting screwed — and if I have to go into court, I’ll do it.”

Then Patel went silent for three days without returning numerous emails, phone and text messages. On the afternoon of April 14 he sent a brief text, “too many cooks in the kitchen.”

Later that afternoon, Mehdizadeh’s lawyer sent the Southern Investigative Reporting Foundation a signed and notarized statement from Patel, stating that all of the information he had provided about Vincent Mehdizadeh and Medbox was false.

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In certain circumstances that affidavit might be definitive, but in this instance it is virtually meaningless. Here is why:

Patel initiated contact with the Southern Investigative Reporting Foundation in the middle of October last year and never wavered in his desire to contribute documents to a follow-up exposé of Medbox, despite an equally profound fear of being discovered doing so. Though the foundation declined to pursue an investigation of the Arizona dispensaries, Patel provided the Pegah Mehdizadeh emails to the foundation in December. Patel’s explanations of the circumstances and conversations surrounding his obtaining of these documents were corroborated by others interviewed by the foundation. For his part, Patel said he had given the Pegah Mehdizadeh documents (among many others) to a local prosecutor in Arizona who retired suddenly last year. A subsequent relationship with a plaintiff’s attorney was terminated due to a demand for a retainer that Patel said he could not afford.

The email thread he forwarded to the Southern Investigative Reporting Foundation gave no appearance of having been manipulated, and the email address is one Mehdizadeh had used during that period.

To the extent that was even feasible for Patel to do so, generating these documents would have involved unusual risk, expense and effort and for absolutely no payoff. How would having created a fake driver’s license and a background report help him recoup his investment or even further his cause in a potential legal fight? On another note, being caught generating those documents would almost certainly result in felony prosecution under identity theft status and a guarantee of civil liability.

Patel told the Southern Investigative Reporting Foundation that at the time the disputed emails had been sent, he and Mehdizadeh had been on friendly terms; Mehdizadeh acknowledged this by sharing the Las Vegas invitation. Patel told the foundation that he thought his relationship with Prescription Vending Machines was going to make him a lot of money. Accordingly, he had no reason then to try to portray Mehdizadeh in a negative light. (Mehdizadeh described Patel repeatedly as seeking to “extort” him, charges Patel laughed about when approached for comment by the foundation on April 10 and 11.)

There are some compelling linkages between the documents and Vincent Mehdizadeh.

One data point connecting the disputed Pegah Mehdizadeh’s license and Vincent Mehdizadeh is the address: 4351 Park Arroyo in Calabasas, a property owned by the Michelle Mehdizadeh Family Trust. In addition, Parviz Mehdizadeh, Vincent’s father, has used the address to register a series of businesses.

(Pegah Mehdizadeh is a 37-year-old female physician whose address is listed in the disputed background report and whose birthday is the same as the one on the driver’s license. She did not return a call seeking comment.)

Additionally, the Intelius report clearly identifies the account holder as vin.zadeh@gmail.com. That email address belongs to Vincent Mehdizadeh and he has frequently used it to communicate with the Southern Investigative Reporting Foundation.

The foundation asked a spokesman for Intelius about the role email addresses play in setting up and maintaining an account. In reply he wrote, “An e-mail address serves as a username in an Intelius account. A customer supplies an e-mail address and password when they create an account, and they use that e-mail address and password to access their account.”

The account was opened at some point in 2010, months before Patel said he saw the Prescription Vending Machines ad and began communicating with Mehdizadeh.

Put bluntly, Patel signed the affidavit under financial and legal duress. Though he comes from a middle-class background, he is a 33-year-old single parent of multiple children and currently lives with his oncologist brother’s family while he attempts to launch a medical marijuana business. He said that apart from his family’s support, he has little money of his own and would appear to have no capacity to wage a legal fight against Mehdizadeh, who is now a multimillionaire.

Throughout his dialogue with the Southern Investigative Reporting Foundation, Patel’s fear of being involved in litigation with Mehdizadeh was palpable (even if he initiated contact with the foundation), and he constantly reiterated his anxiety about exposing his young children to the stress of litigation.

Even after discussing the documents he sent the Southern Investigative Reporting Foundation — spending many hours talking about their origins and what Patel believed they implied about Mehdizadeh’s business conduct — Patel left little to the imagination about his motivation for his actions.

The evening of April 15, Patel wrote to the Southern Investigative Reporting Foundation, “I did what I had to for my family in good faith that good men will carry the torch of truth.” After Patel had given the affidavit, he described himself as “a victim of fraud” while discussing his experience with Mehdizadeh in an email.

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Last September the foundation released an initial investigation of many undisclosed legal issues in Vincent Mehdizadeh’s past and associated with the then high-flying company he had founded to capture a piece of the medical marijuana business.

The story above and the related emails prompted the Southern Investigative Reporting Foundation to begin additional investigation into Mehdizadeh’s background, starting with a re-examination of its notes from the many phone calls and email exchanges with him during the reporting process in the summer of 2013.

What emerged from this study were questions about a California-domiciled holding company set up in March 2009 called Sniperella Investments Inc., whose initial president was Mehdizadeh’s then-girlfriend Yocelin Legaspi.

The company was set up, Mehdizadeh told the Southern Investigative Reporting Foundation, as he transitioned away from the legal referral service business in 2008 to working on what would become Medbox. (The legal referral business activities had prompted a joint Los Angeles Department of Consumer Affairs and District Attorney suit; he was ordered to pay back $450,000 to his victims. It was also the job he held prior to seeking creditor protection under the bankruptcy code.)

In an email exchange with the Southern Investigative Reporting Foundation, Mehdizadeh last summer described Sniperella as a “consulting firm I was associated with in 2009. It ceased doing business in January 2010.”

Sniperella has little public documentary footprint save for a June 2010 suit filed against both Mehdizadeh and Sniperella by Los Angeles resident Abdul Ala Ahmed, which described Sniperella as an “alter ego” of Mehdizadeh. As support for this “alter ego” status, Ahmed’s suit claimed the $50,000 cashier’s check he gave Mehdizadeh to purchase a marijuana dispensary was made out to him personally and promptly deposited in Sniperella’s account with Bank of America.

(Ahmed’s suit, having been amended to make Sniperella the defendant, is proceeding to trial according to his lawyer, Stanley Kimmel.)

The Southern Investigative Reporting Foundation examined Sniperella’s financial records as part of this investigation and it appears that Mehdizadeh and Sniperella are effectively one in the same: Mehdizadeh wrote and cashed checks within the account, wired money in and out of it, and paid bills on behalf of his father and girlfriend.

The defining feature of Sniperella’s brief economic life is the sheer velocity of activity in its checking account: Based on the Southern Investigative Reporting Foundation’s analysis, the account had just over $2.97 million worth of deposits and withdrawals from March 2009 to July 2010. (About $148,000 of the account’s activity occurred in 2010.)

There was over $42,000 spent on five weekend trips to Las Vegas (including cash withdrawals from Vegas banks), $9,342 for auto maintenance and payments, $6,400 in legal fees and expenses, $4,581 at Ticketmaster for unspecified tickets, and more than $24,400 in payments made for a Discover card of Mehdizadeh’s girlfriend. Thousands of additional dollars were spent on high-end clothing stores, trendy Los Angeles area restaurants and clubs and travel around the California coast.

More important, Sniperella provided Mehdizadeh with a veritable river of cash. In 2009, he withdrew more than $160,000 from various Los Angeles and Las Vegas Bank of America branches, and that December alone he cashed checks for $43,000. Additionally, over the life of the account, he withdrew more than $26,000 from ATMs.

The last activity for the Sniperella account was on July 12, 2010: a $20 payment to the California Secretary of State and a $26 payment to the Apple iTunes store.

Though numerous checks had been written, the payee was not designated in the financial records examined by the Southern Investigative Reporting Foundation, so determining in which businesses (if any) Sniperella was making investments was not possible.

Of particular note was the activity between Nov. 10 and Dec. 10, 2009, when a $300,000 online transfer was made to Sniperella from another account. Between Nov. 17 and Nov. 24, a sum of $42,000 was withdrawn from Sniperella, and over the course of this period, more than $158,000 was transferred back to the account, with $100,000 remaining with Sniperella.

Mehdizadeh filed his bankruptcy petition on July 14, 2010, listing $9,500 in assets, an income of $3,800 monthly and declaring that his 2009 income was $90,000 from “consulting.”

When asked about Sniperella in light of these details, Mehdizadeh replied through his lawyer, “[Sniperella Investments] had a focus of investing in different industries that were of interest. My girlfriend at the time was operating the company as she possessed a real estate license and was pursuing real estate investments. When I filed for bankruptcy in 2010, these company’s bank statements as well as 2 others were asked for by the US Trustee’s office overseeing the bankruptcy petition. I was also interviewed and asked questions about the statements and cleared all inquiries without a problem at all. My bankruptcy was discharged in 2011.”

Pressed on the matter, Mehdizadeh angrily declined to go into detail about what industries Sniperella targeted for investment or where the flow of deposits in 2009 came from.

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A final matter of interest for the Southern Investigative Reporting Foundation was what Vincent Mehdizadeh has done with his shares. Specifically, an impressively large block of his holdings were sold or transferred, and it’s not clear to whom or for how much.

In a December filing, Mehdizadeh is listed as owning 17,882,240 shares (adjusting for a 100 percent stock dividend paid in February). Less than three months later, however, in a filing he is listed as of March 24 as owning 16,238,940 shares — both personally and through a holding company he controls — a difference of 1,643,300, or more than 9 percent of his shares as of the end of the year.

An executive choosing not to disclose the sale or transfer of his or her shares is exceedingly rare among public company issuers, regardless of the enterprise’s size. Moreover, the shares could have been easily worth more than $40 million given Medbox’s share prices in the first quarter. Mehdizadeh did not address the Southern Investigative Reporting Foundation’s request to elaborate on where the shares went in a lengthy statement.

His response in full was as follows: “As the majority shareholder and founder of this company, I put the burden on myself to attract talent to our board and executive management team for the benefit of the company and its shareholders. I have used my shares over the last few years in many ways to directly and indirectly benefit the company.”

He continued, “As a non-reporting pink-sheet company during the period in time referenced, I had no obligation to document my private share sales/transfers. However, I did voluntarily disclose my share count in quarterly reports filed with OTC Markets as well as registration statements filed with the Securities and Exchange Commission. Again, I did so voluntarily and specifically for a higher level of transparency for shareholders. Now that we are an SEC filer, I would have to file Form 4’s every time I have a change in share count. I look forward to keeping investors in the loop as that is a duty I personally subjected myself to.”

Update: This story was updated in May 2020 with three additional paragraphs of introduction.

3 thoughts on “What’s in a Name? The Ongoing Saga of Medbox

    • I agree, this reads like a neighborhood gossip column. An attempt to manipulate prices probably. As an investor, I can’t help but be annoyed by this type of non-journalism. I guess we’ll have to jus wait and see how all of this affects the company.

      • No, this is some good reporting. I don’t see how this is biased as everything is based on facts and clearly sourced & cited. Obviously the poor-performance and delisting of the company’s stock is a evidence enough to everything written here in the report.

        Nonetheless, it’s incredibly entertaining that both of you find pleasure in blind faith for bad companies and even poorer management.

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