For anyone in need of a lawyer in Southern California who understands the needs of a company that may exist largely on paper (and may never materialize), Phillip Koehnke is the person to see.
The 45-year-old former Colorado State wrestler, who serves as Medbox’s chief legal adviser, has carved out a niche representing penny stock companies in their brief interludes as going concerns. Koehnke’s clients are virtually identical: Exceptionally small and barely capitalized, they often have the skimpiest outline of a serious business plan and little in the way of experienced management or serious governance and operational controls.
His ability to earn a living in the bowels of the capital markets has placed Koehnke in proximity to the rich tapestry of the penny stock universe’s movers and shakers. A licensed broker, Koehnke has served as a legal adviser to a series of firms whose business model appears centered on small cap stock trading and promotion and possessing extensive regulatory problems.
One of these was Scottsdale Capital Advisors, an Arizona-based brokerage run by John and Justine Hurry, a husband and wife duo who are no strangers to litigation or censure. Koehnke advised Scottsdale when it hired a pair of brokers, Andrea Ritchie and Joseph Padilla, who were under investigation by the Securities and Exchange Commission for a stock promotion scam related to football player Daniel “Rudy” Ruettiger’s erstwhile sports drink company. (The two brokers received three-year suspensions from the securities industry; the company is no longer publicly traded.)
Both of Koehnke’s other brokerage firm clients, OC Securities and Aaron Capital, have also run afoul of market regulators on several occasions.
Not shy about starting a fight on behalf of a client, Koehnke sent Seeking Alpha contributor Alan Brochstein a cease and desist letter threatening legal action if he didn’t remove his article critical of AVT. (Brochstein didn’t comply and has continued to criticize the company.)
According to Mehdizadeh, Koehnke came up with the idea to select Tim Quintanilla as the company’s accountant. After the SEC and Public Company Accounting Oversight Board faulted Quintanilla’s diligence, Koehnke approved the appointment of Alexander Anguiano, Mehdizadeh’s personal accountant. In addition, Koehnke also did not stop the internal transfer of Mehdizadeh’s holding company to Medbox’s chief executive, a highly unusual maneuver.
Pressed on the matter of how Koehnke’s continuing advisory work jibes with Medbox’s desire to be seen as a serious company, Mehdizadeh said, “[Medbox] is looking to phase Phillip out soon.”
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For more coverage of Medbox, read “Tinkerer, Lawyer, Hustler, Lies: One Man’s Path to a Dope Fortune.”