Hirschmann Filing

Case 8:23-cv-00855-JWH-KES Document 155 Filed 09/14/23 Page 1 of 23 Page ID #:3321
1 Christopher D. Grigg (State Bar No. 220243)

[email protected]
2 Christopher P. Hotaling, pro hac vice
[email protected]
3 Stephen M. LaRose, pro hac vice
[email protected]
4 NIXON PEABODY LLP
300 S. Grand Avenue, Suite 4100
5 Los Angeles, CA 90071-3151
Tel: 213-629-6000
6 Fax: 213-629-6001
7 Attorneys for Defendant Rolf Max Hirschmann
and Relief Defendants Oceans 19 Inc., Autobahn
8 Performance LLC, One Click General Media, Inc. and
Opus Collective
9
10 UNITED STATES DISTRICT COURT
11 CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION
12 SECURITIES AND EXCHANGE Case No. 8:23-cv-00855-JWH (KESx)
COMMISSION,
13
Plaintiff, DEFENDANT ROLF MAX
14 HIRSCHMANN AND RELIEF
vs. DEFENDANTS OCEANS 19 INC.,
15 AUTOBAHN PERFORMANCE
INTEGRATED NATIONAL LLC, ONE CLICK GENERAL
16 RESOURCES, INC. dba WEEDGENICS, MEDIA INC., AND OPUS
ROLF MAX HIRSCHMANN aka “MAX COLLECTIVE’S EX PARTE
17 BERGMANN,” PATRICK EARL APPLICATION FOR
WILLIAMS, MODIFICATION OF ORDER
18 APPROVING STIPULATION FOR
Defendants, and LIMITED MODIFICATION TO
19 PRELIMINARY INJUNCTION
WEST COAST DEVELOPMENT LLC, WITH RESPECT TO CERTAIN
20 INR CONSULTING LLC (WYOMING DEFENDANTS AND RELIEF
ENTITY), OCEANS 19 INC., DEFENDANTS [ECF NO. 93];
21 AUTOBAHN PERFORMANCE LLC, EXHIBIT A
ONE CLICK GENERAL MEDIA INC.,
22 OPUS COLLECTIVE, JOHN ERIC SUPPORTING DECLARATION
FRANCOM, INR-CA INVESTMENT OF CHRISTOPHER P.
23 HOLDNGS, LLC, MICHAEL DELGADO, HOTALING FILED
TOTAL SOLUTION CONSTRUCTION CONCURRENTLY HEREWITH
24 LLC, BAGPIPE HOLDINGS LLC,
BAGPIPE MULTIMEDIA LLC, TYLER Hon. John W. Holcomb
25 CAMPBELL, INR CONSULTING LLC
(CALIFORNIA ENTITY), HIDDEN
26 SPRINGS HOLDINGS GROUP LLC and
ALEXANDRIA PORTER BOVEE aka
27 “AIA MONTGOMERY,”
28 Relief Defendants.
DEFENDANTS’ EX PARTE APPLICATION FOR MODIFICATION OF ORDER

1 TABLE OF CONTENTS
2 Page
3 INTRODUCTION ..................................................................................................... 4
4 PROCEDURAL HISTORY ...................................................................................... 6
5 ARGUMENT ........................................................................................................... 10
6 I. The Serious Medical Issues Facing the Hirschmann Family
7 Require the Granting of the Requested Relief .................................... 10
8 II. The Contents of the Williams Email Also Require the Granting
9 of the Requested Relief ....................................................................... 14
10 CONCLUSION........................................................................................................ 17
11 EXHIBIT A.............................................................................................................. 18
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1 TABLE OF AUTHORITIES
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Page(s)
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Cases
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Fed. Trade Comm’n v. Kutzner,
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2017 WL 5188334 (C.D. Cal. Mar. 10, 2017) ................................. 11, 12, 14, 16
6
Sec. & Exch. Comm’n v. Capital Consultants, LLC,
7 397 F.3d 733 (9th Cir. 2005) .............................................................................. 11
8
Other Authorities
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Local Rule 7-19.1 .................................................................................................... 10
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1 INTRODUCTION
2 The Securities and Exchange Commission (“SEC”) obtained extraordinary
3 pre-judgment relief against defendants in this action, including defendant Rolf Max
4 Hirschmann, based largely upon the SEC’s serious, yet unproven, allegations of a
5 Ponzi-like scheme. However, much about this case has fundamentally changed since
6 the SEC first filed its complaint under seal on May 16, 2023 (ECF No. 1) and its
7 request for preliminary injunctive relief and appointment of a permanent receiver
8 (ECF Nos. 24-25). On the one hand, the difficult family circumstances of Mr.
9 Hirschmann, which precipitated the parties’ stipulation (ECF No. 93) allowing he
10 and his family to continue to reside in two properties and use two vehicles, have only
11 become more dire. On the other hand, the SEC has not disclosed material new
12 information in its possession that undercuts the core of many of the complaint’s
13 factual allegations against Mr. Hirschmann and other defendants. It is of course these
14 very same allegations that formed the basis of the SEC’s requests for extraordinary
15 preliminary relief.
16 Mr. Hirschmann, the SEC, and the Receiver previously entered a Stipulation
17 modifying the Court’s Preliminary Injunction Order by permitting Mr. Hirschmann
18 and his wife to continue to reside at a property located on Hacienda Avenue in Boise,
19 Idaho (the “Hacienda Property), Mr. Hirschmann’s elderly father to continue to
20 reside at a property located on Sultana Drive in Boise, Idaho (the “Sultana Property”),
21 and Mr. Hirschmann and his wife’s continued use of two vehicles through September
22 20, 2023. (ECF No. 89). Since the Court approved the Stipulation on June 29, 2023,
23 the medical concerns underpinning it have only become more serious. As detailed
24 below, Mr. Hirschmann’s father, Erich, suffers from Stage V kidney disease and his
25 condition has deteriorated to such a degree that the Sultana property essentially serves
26 as his hospice location and Mr. Hirschmann drives his father to and from medical
27 treatments using one of the cars discussed in the Stipulation. Additionally, Mr.
28 Hirschmann’s wife and sister-in-law each suffer from significant medical conditions
4
1 for which Mr. Hirschmann also provides significant care. Given the very serious
2 (and, for Erich Hirschmann, terminal) ailments the Hirschmann family is currently
3 facing, it has been incredibly difficult to find suitable alternative housing
4 arrangements in advance of the September 20 date and a modest extension of time is
5 necessary to preserve the status quo while this case progresses.
6 While the grave health conditions of Mr. Hirschmann’s family members have
7 persisted and worsened, and while Mr. Hirschmann and his family faced the prospect
8 of losing their homes and daily use cars, the SEC has been communicating and
9 meeting in person with the central defendant in the complaint, Patrick Williams, the
10 principal of Defendant Integrated National Resources, d/b/a Weedgenics (“INR”),
11 who notably has still not entered an appearance in this case. Apparently, the Receiver
12 and her counsel have also been privy to Mr. Williams’ information.
13 Neither the SEC’s nor the Receiver’s filings in this case reveal the contact with
14 Mr. Williams or when it began. This is particularly troubling to Mr. Hirschmann for
15 several reasons. First, as detailed below, Mr. Williams provided the SEC with
16 significant, detailed information directly undermining the SEC’s allegations against
17 Mr. Hirschmann and other defendants. Second, it appears that the SEC’s contact with
18 Mr. Williams has taken place in coordination with the United States Attorney’s
19 Office for the Central District of California (“USAO”), which is conducting an
20 ongoing parallel criminal investigation into the events described in the SEC’s
21 complaint. That investigation has severely limited Mr. Hirschmann’s ability to
22 participate in this case. Mr. Hirschmann has no information regarding how long or to
23 what degree the SEC has been in contact with Mr. Williams or has been coordinating
24 with federal prosecutors or their investigators, but the effect is the same and has
25 placed Mr. Hirschmann at an unfair disadvantage.
26 The SEC chose to make this case public months ago. But this new information
27 only came to light because Mr. Williams, on his own initiative, contacted counsel for
28 Mr. Hirschmann via email and provided a detailed statement outlining the
5
1 information he has provided to date to the SEC and representatives of the USAO. Mr.
2 Williams’ email contains highly probative admissions in which he both inculpates
3 himself in the alleged Ponzi scheme involving his company, INR, and exculpates
4 Mr. Hirschmann and other relief defendants as to their knowledge of Mr. Williams’
5 allegedly fraudulent conduct. Mr. Williams’ admissions cut the SEC’s complaint
6 allegations as to Mr. Hirschmann and other defendants to their quick.
7 Given both the ongoing humanitarian issues surrounding the health and well-
8 being of Mr. Hirschmann’s family and the highly probative new information
9 contained in Mr. Williams’ email, Mr. Hirschmann respectfully requests that this
10 Court grant him a degree of modest relief from the September 20, 2023, deadline
11 contained in the parties’ Stipulation and extend the time period in which Mr.
12 Hirschmann and his family can continue to live in the Hacienda and Sultana
13 properties, and use the two cars, until January 10, 2024.
14 PROCEDURAL HISTORY
15 The SEC filed its complaint naming Mr. Hirschmann as a defendant, and his
16 associated companies as Relief Defendants, on May 16, 2023. (ECF No. 1.) On June
17 2, 2023, the Court entered a Preliminary Injunction, which among other things, froze
18 certain assets of the defendants and relief defendants and appointed a permanent
19 receiver. A primary basis for the Court’s decision to grant the preliminary injunction
20 and appoint the Receiver was the factual allegations contained in the SEC’s
21 complaint and accompanying memorandum of law. (ECF No. 33, pp 3-4 “Section I.
22 Findings of Fact.”) Since Mr. Hirschmann’s current counsel was retained in the
23 middle of June 2023, Mr. Hirschmann has made concerted efforts to comply with the
24 Court’s Preliminary Injunction, including turning over ten automobiles and four
25 pieces of real estate owned by Relief Defendant Autobahn to the Receiver and filing
26 the required sworn statements. (See ECF No. 89.) Mr. Hirschmann, through counsel,
27 has also turned over funds, access to email accounts, and many documents relevant
28 to the Receiver’s court-authorized duties. (See id.)
6
1 On June 28, 2023, Mr. Hirschmann, the SEC, and the Receiver entered a
2 stipulation providing, subject to Court approval, that “Mr. Hirschmann and his wife
3 may continue to live at the Hacienda property owned by Autobahn, Hirschmann’s
4 father may continue to live at the Sultana property owned by Autobahn” and they
5 may continue to use the two automobiles owned by Autobahn that Mr. Hirschmann
6 and his wife use on a daily basis until September 20, 2023. (ECF No. 89.) The Court
7 approved the stipulation on June 29, 2023. (ECF No. 93.)
8 In the time since, given the severity of the medical conditions of his family, it
9 has been very difficult for Mr. Hirschmann to search for and secure alternative
10 housing and transportation solutions that meet his family’s critical needs.
11 As mentioned above, the SEC’s Complaint recounts Patrick Williams’ central
12 role in this matter, including allegations that Patrick Williams “holds himself out
13 publicly as the vice president of INR, and INR’s corporate filings describe Williams
14 as INR’s president and chairman of the board. Williams is the sole signatory on INR’s
15 bank accounts that received investor funds and made interest payments to investors.”
16 (ECF No. 1 ¶ 17.)
17 On September 4, 2023, counsel for Mr. Hirschmann, together with counsel for
18 other relief defendants, received an email from Mr. Williams. See Exhibit A
19 (hereinafter the “Williams email”). The Williams email sets forth the following
20 highly probative statements and the context in which he delivered them to the SEC
21 and USAO:
22  Mr. Williams met with representatives of the U.S. Attorney’s Office for
23 the Central District of California, federal agents, and counsel for the
SEC in this case in Los Angeles on August 29, 2023, at 2:00 p.m. PST.
24
25  Mr. Williams tried to provide truthful information to the government
and SEC but was constantly interrupted and “intimidated” during the
26
meeting because his information was inconsistent with the
27 government’s narrative in this case. Because of the relentless pressure
from the government during the meeting, Mr. Williams felt compelled
28
7
1 to prepare a written statement that he provided to the government and

2 then transmitted in an email to defense counsel.
3  Mr. Williams admitted that he represented INR to be an established

entity in the cannabis industry. He did so in order to make money to fuel
4
his music career.
5
 Mr. Williams made contact with a cannabis company in Las Vegas
6 called Qualcan, which had an operative cannabis grow operation. Mr.
7 Williams told Qualcan that he had investors who may be interested in
investing in Qualcan who would be interested in touring their facility.
8 Instead, those investors were actually interested in INR but Mr.
9 Williams made it appear that the Qualcan operation was actually INR’s
grow operation.
10
11  Importantly, Mr. Williams admitted that he never told Mr. Hirschmann
that INR was not a viable cannabis company. Specifically, Mr. Williams
12 admitted he told Mr. Hirschmann that he “owned a cannabis grow in
13 Las Vegas and more than a dozen stores and that I was looking for
someone to help me raise money.” This was untrue. Mr. Williams
14 admitted that INR was not an active or thriving cannabis cultivation and
15 distribution company, despite the representations he had previously
made to Mr. Hirschmann.
16
17  Mr. Williams admitted that, in order to aid Mr. Hirschmann’s marketing
activities for INR, he provided Mr. Hirschmann “all the information he
18 needed to get started – pictures, facts, plans and contracts.” As he said
19 it, Mr. Williams ensured the company and financial information he
provided Mr. Hirschmann “sounded legit.”
20
 With respect to his statements concerning the raising of capital from
21
investors, Mr. Williams admitted, “In 2021 I told everyone that the first
22 build was done in Adelanto [a purported INR cannabis grow operation
in Adelanto, California]. Max [Mr. Hirschmann] was told we raised
23
about 80 million, of which he had helped bringing about 35 million. I
24 started a second raise in the middle of 2021 or so to double the grow
houses I was ‘building’ in Adelanto.” Despite his representations to Mr.
25
Hirschmann to the contrary, there was no actual INR grow operation in
26 Adelanto.
27  In perhaps the most sweeping admission, Mr. Williams made the
28 following statement: “Each of them [the defendants] did legit work.
8
1 Each of them put in time and labor earning their money. Its my
2 understanding the SEC is saying they were overpaid, but really top
players in this industry get paid way more. Max worked his tail off doing
3 legitimate marketing. Mike Delgado drove all over the US getting me
4 information I needed to keep myself looking like an owner of a big
cannabis company. Aia worked many many hours dealing with
5 investors and with legal trying to save the company and investors from
6 losing everything. Tyler handled payroll in a time the company was
desperate to get the settlements paid. All of these people believed in me
7 and this company and thought they were doing something good.
8
I have never done anything like this before in my life, and am giving
9 myself up in an attempt to right a wrong. I never imagined this would
10 get as far as it has, and I don't want these innocent people to continue
being harmed for my actions. There is no cannabis. There are no grow
11 houses or dispensaries. This was all a plan to raise money and get started
12 in the weed business, and it just went the wrong way. None of these
people, my employees third party contractors or investors had any idea
13 that the company didn’t have the assets . . . . None of my friends or
14 family or music business associates knew. This was all something I
started.”
15
16 Exhibit A.
17 Despite the passage of several weeks since the SEC met with Mr. Williams,
18 the SEC (or the USAO) did not inform Mr. Hirschmann’s counsel of the statements
19 made by Mr. Williams concerning Mr. Hirschmann. On September 11, 2023, counsel
20 for Mr. Hirschmann contacted counsel for the SEC to inform the SEC of Mr.
21 Hirschmann’s concerns with the information learned through the Williams email.
22 During this conversation, counsel for the SEC confirmed that Mr. Williams had
23 indeed sat for an interview with the SEC and the USAO on August 29. In the interest
24 of unrequited transparency, counsel for Mr. Hirschmann explained they had received
25 the Williams email and that they considered the email and its contents material and
26 exculpatory of the factual allegations made in the SEC’s complaint as to Mr.
27 Hirschmann. Counsel for Mr. Hirschmann agreed to provide a copy of the Williams
28 email to the SEC. (See Hotaling Declaration at ¶5.) Later that same day, at the request
9
Case 8:23-cv-00855-JWH-KES Document 155 Filed 09/14/23 Page 10 of 23 Page ID
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1 of counsel for the SEC, counsel for Mr. Hirschmann had a phone conversation with
2 counsel for the Receiver. To counsel for Mr. Hirschmann’s surprise, Receiver’s
3 counsel indicated that he too was aware that Mr. Williams had met with the USAO
4 and the SEC at the end of August. (Id. at ¶6.) Counsel for Mr. Hirschmann is unaware
5 of information indicating the nature or extent of the Receiver’s involvement in the
6 SEC’s and USAO’s engagement with Mr. Williams or when the Receiver first
7 learned of it. No such information appears in the Receiver’s filings in this case.
8 On September 11, 2023, and September 12, 2023, the parties had a meet and
9 confer in compliance with Local Rule 7-19.1 and the Court’s Standing Order to
10 discuss this application. During the discussions, counsel for Mr. Hirschmann
11 proposed a stipulation to extend the deadline and advised that Mr. Hirschmann would
12 proceed with this application if no consensus could be reached. Counsel for both the
13 SEC and the Receiver asked questions and indicated they would respond later. On
14 September 12, counsel for the Receiver advised by email that the Receiver “oppose[s]
15 the ex parte application.” The SEC provided a slightly different response. On
16 September 13, counsel for the SEC advised via email that the SEC opposed the
17 application but stated “Given the health challenges faced by defendant Hirschmann’s
18 loved ones, however, the SEC would be amenable to a three-week extension of the
19 current modification, on strict condition that the stipulating parties all agree that this
20 additional 21-day period shall be the final such extension.” (Id. at ¶¶7-9.)
21 For the reasons set forth in this application, Mr. Hirschmann respectfully
22 requests that the Court grant the requested extension to January 10, 2024.
23 ARGUMENT
24 I. The Serious Medical Issues Facing the Hirschmann Family Require the
25 Granting of the Requested Relief.
26 Paragraph 18 of the Preliminary Injunction Order provides that this Court
27 “shall retain jurisdiction over this action for the purpose of implementing and
28 carrying out the terms of all orders and decrees that may be entered herein and to
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1 entertain any suitable application or motion for additional relief within the
2 jurisdiction of this Court.” (ECF No. 33.) “[A] district court’s power to supervise
3 an equity receivership and to determine the appropriate action to be taken in the
4 administration of the receivership is extremely broad.” Sec. & Exch. Comm’n v.
5 Capital Consultants, LLC, 397 F.3d 733, 738 (9th Cir. 2005). For purposes of equity
6 and fairness, and in light of the highly relevant exculpatory information contained in
7 the Williams email, this Court should exercise its broad authority and discretion to
8 issue an order allowing Mr. Hirschmann to maintain physical possession of the two
9 vehicles that he and his family need to continue living their daily lives, and to remain
10 at both the Hacienda Avenue Property and the Sultana Drive Property. Mr.
11 Hirschmann respectfully asks for this modest modification at this time, particularly
12 where no final judgment has entered, the merits of this case have yet to be litigated,
13 the assets in question are being preserved, and another defendant has made a
14 confession that exculpates Mr. Hirschmann.
15 Such an order would be consistent with the goals of the Court’s Preliminary
16 Injunction. “The purpose of [a] preliminary injunction is to maintain the status quo
17 between the litigants pending final determination of the case.” Fed. Trade Comm’n
18 v. Kutzner, 2017 WL 5188334, at *6 (C.D. Cal. Mar. 10, 2017) (quoting Wash.
19 Capitols Basketball Club, Inc. v. Barry, 304 F. Supp. 1193, 1196 (N.D. Cal. 1969)).
20 Because of the critical medical issues facing Mr. Hirschmann’s family, allowing
21 them to continue to reside in the Hacienda and Sultana properties, and continue to
22 use the cars, will maintain the status quo.
23 It is not necessary for Mr. Hirschmann to surrender the Hacienda and Sultana
24 homes, along with the two cars, to the Receiver by September 20. Specifically, there
25 is no risk that Mr. Hirschmann will “dissipate, conceal, or transfer” the deeds to these
26 properties; the Hacienda Avenue property and the Sultana Drive property are both
27 insured (copies of these insurance policies have also been provided to the Receiver),
28 and, given the pending litigation, Mr. Hirschmann is not able to sell the properties
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1 himself. Furthermore, pursuant to the terms of the June 29, 2023, Stipulation,
2 representatives of the Receiver conducted physical inspections of both the Hacienda
3 and Sultana properties in late August 2023. There has been no indication (and the
4 Receiver has not provided copies of any inspection report to Mr. Hirschmann) that
5 those inspections turned up any evidence that Mr. Hirschmann is doing anything
6 other than fully maintaining both properties. This makes sense – Hacienda is where
7 he and his wife live every day and Sultana is where his elderly and ill father lives. He
8 has every incentive to make sure both properties are maintained and well kept. He is
9 also paying the taxes and insurance on the properties, as well as the applicable HOA
10 fees.
11 In contrast, requiring Mr. Hirschmann, his wife, and his father to vacate their
12 homes in light of the medically precarious circumstances described below would
13 disrupt the status quo and place them all in a significantly different position than
14 when this litigation began. See Kutzner, 2017 WL 5188334, at *6 (“[S]elling the
15 Subject Property would upset the status quo as it would place Defendant Foti and his
16 family in a significantly different position than prior to the start of this litigation by
17 removing them from their home and stripping them of their ownership interest in
18 their assets. In addition, it would place the Receivership Estate in a different position
19 by changing the form of the assets held in the Receivership Estate.”).
20 Specifically, Mr. Hirschmann’s 84-year-old father, Erich Hirschmann, has
21 Stage V (end-of-life) kidney disease, diabetes, and neuropathy, and he has previously
22 had three amputations that make walking difficult, even though it is the only means
23 by which he can travel on his own. When the June 29, 2023, Stipulation was entered,
24 Mr. Erich Hirschmann was suffering from Stage IV kidney disease. Over the last
25 three months, his disease has worsened to the extent that he is now essentially in
26 hospice care while residing in the Sultana property. His life expectancy is one year
27 or less. The location of the Sultana property is particularly well-suited to Mr. Erich
28 Hirschmann’s disease and limited mobility. The home is very close to a path where
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1 he can exercise, when able, as well as walk to a nearby shopping center. Mr. Erich
2 Hirschmann views the Sultana property as his home and it is the place where he will
3 likely pass away. Mr. Erich Hirschmann would simply like to spend what remains of
4 his life in peace and with dignity in the place he considers home. There is virtually
5 no risk that the value of the property will in any way be diminished or impaired during
6 Mr. Erich Hirschmann’s continued residence there. He is not going to sell it or in any
7 way damage it – quite the opposite, he would much prefer to keep it exactly as it is
8 as he spends his final time there. Further, because of the extent of his medical
9 condition and lack of mobility, Mr. Erich Hirschmann relies heavily on Mr. and Mrs.
10 Hirschmann’s use of the two cars to take him to and from his medical appointments,
11 as well as to pick up groceries and other daily living needs.
12 Further, Mr. and Mrs. Hirschmann act as the primary caregivers for Mrs.
13 Hirschmann’s 79-year-old sister, Bonnie Newton, who suffers from Polio, ME/CFS,
14 Lyme disease, non-repairable ruptured hamstrings, spinal stenosis, and other
15 mobility issues that interfere with her ability to engage in activities of daily living.
16 The Hirschmanns use both of the cars to take Mrs. Hirschmann’s sister to and from
17 her medical appointments.
18 Additionally, Courtney Hirschmann, Mr. Hirschmann’s wife, suffers from a
19 broken hip and femur injury that significantly limits her mobility, and she also
20 recently had emergency surgery on her leg. She also has Eosinophilia, a condition in
21 which her Eosinophils are hyper-elevated and attack her lung tissue, causing
22 breathing difficulties. This condition is currently being treated with an injection
23 administered every eight weeks. Mrs. Hirschmann relies on one of the cars to drive
24 herself to and from her own medical appointments.
25 With respect to the Hacienda property, this is Mr. and Mrs. Hirschmann’s
26 primary, and now only, residence. Because of the ongoing and critical nature of his
27 family’s medical ailments, it has been exceedingly difficult for Mr. Hirschmann to
28 secure alternative living arrangements for he, his wife, and his father. Evicting Mr.
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1 Hirschmann and his family from their homes, and depriving he and his wife of the
2 only cars they drive, by September 20 would be particularly cruel and unnecessary,
3 particularly because the status quo of the assets are currently being maintained, and
4 especially in light of the revelations in the Williams email that significantly call in to
5 question Mr. Hirschmann’s culpability. Indeed, in Kutzner, this Court found that
6 requiring the defendant and his school-aged children to move to a new town and new
7 school district before liability had been determined (the situation in this case is even
8 more drastic considering the Williams email) would constitute “significant and
9 irreparable harm.” Kutzner, 2017 WL 5188334, at *8. Here, to require Mr. and Mrs.
10 Hirschmann, along with the elderly and gravely ill Erich Hirschmann, to vacate their
11 homes, the harm would be even more significant. There is no need to subject Mr.
12 Hirschmann and his family to such harsh treatment under these circumstances. An
13 extension of the time period during which Mr. Hirschmann and his family can
14 continue to reside in the Hacienda and Sultana properties, and continue to use the two
15 cars, until January 10, 2024 is compassionate and reasonable in this case.
16
II. The Contents of the Williams Email Also Require the Granting of the
17 Requested Relief.
18 The Court’s Preliminary Injunction was predicated on the factual recitation the
19 SEC made both in its Complaint as well as its accompanying memorandum of law.
20 Similarly, the Court’s decision to appoint a permanent receiver rested on the same
21 factual narrative. But there can be little doubt that the SEC’s narrative is seriously in
22 question.
23 To make this point plain, in its Complaint, the SEC has alleged that Mr.
24 Hirschmann actively, knowingly, and intentionally conspired or schemed with Mr.
25 Williams, and his company INR, to engage in a Ponzi scheme whereby investors
26 were defrauded into making capital contributions to INR with the belief that the
27 company was a vibrant and prosperous cannabis enterprise looking to expand. (See
28 generally ECF Nos. 1,4.) Specifically, the Complaint alleges that Mr. Hirschmann,
14
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1 together with Mr. Williams and INR, knowingly schemed to make “material
2 misrepresentations” to investors, both before and after investment, regarding INR’s
3 financial health and its intention to expand its cannabis business. (See ECF No. 1 ¶¶
4 46-56.) The gravamen of the Complaint is that Mr. Hirschmann was fully aware of
5 the fraudulent nature of Mr. Williams’ and INR’s business and that he actively
6 participated in a scheme to defraud investors. Yet, the SEC has been in
7 communication with the apparent mastermind of the alleged scheme, Mr. Williams,
8 and possesses information directly contradicting its own factual allegations, at least
9 as it concerns Mr. Hirschmann (and certain other relief defendants).
10 The SEC (and the Receiver) will likely attempt to dispute the accuracy or
11 probative value of the revelations contained in the Williams email but it cannot
12 dispute that Mr. Williams in fact made these statements and they are now part of the
13 record in this case. Mr. Williams’ statements are undeniably exculpatory as they go
14 to the very heart of the SEC’s allegations that Mr. Hirschmann knowingly
15 participated in an alleged Ponzi scheme involving INR. According to the SEC’s
16 complaint, Mr. Williams is the quintessential insider: he was a principal at INR and
17 the motivation behind whatever bad acts or false statements INR allegedly did or
18 made. So, when Mr. Williams said that Mr. Hirschmann, and others, did not have
19 “any idea that the company didn’t have assets,” or that Mr. Hirschmann “truly
20 believed the company was prospering and the investors were growing their money
21 by owning shares of my company,” those are words coming from someone who
22 presumably would know.
23 Mr. Williams’ statements can fairly be viewed as exculpatory and
24 fundamentally detrimental to the SEC’s allegations against Mr. Hirschmann.
25 Whether the SEC has real information, and not conjecture, that contradicts Mr.
26 Williams’ statements remains to be seen. Unfortunately, the recent developments
27 also raise the troubling question of what other information the SEC possesses that
28 also directly undermines its aggressive allegations.
15
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1 For now, the Williams email undermines the complaint and the related factual
2 allegations supporting the Court’s Preliminary Injunction.1 Discovery will likely
3 shed additional light on the true facts and evidence surrounding the SEC’s
4 allegations. In the meantime, as Mr. Hirschmann and the other parties pursue those
5 facts, justice and fairness do not support uprooting him and his frail family members
6 from their homes and their only means of transportation at this time. Rather, justice
7 and fairness support Mr. Hirschmann’s reasonable request allowing him and his
8 family to continue to reside in the Hacienda Property and Sultana Property and
9 continue to use the two cars they have been driving since the Stipulation was entered
10 on June 29, 2023. Finally, allowing he and his family to continue to reside in the
11 homes and use the cars will maintain the status quo and avoid placing them in a
12 “significantly different position than prior to the start of this litigation,” especially in
13 light of the changed circumstances described herein. See Kutzner, 2017 WL 5188334,
14 at *6 (declining to authorize sale of defendant’s home prior to final determination of
15 liability).
16
17 ///
18 ///
19 ///
20 ///
21 ///
22 ///
23 ///
24 ///
25 ///
26
1
27 Mr. Hirschmann is not now asking the Court to revisit its decision to impose its
Preliminary Injunction against him. However, if developments dictate as this case
28 proceeds to discovery, which has not yet begun, Mr. Hirschmann reserves the right
to do so.
16
#:3337
1 CONCLUSION
2 For the reasons explained above, Mr. Hirschmann respectfully requests that
3 this Court grant him immediate relief from the September 20, 2023, deadline
4 contained in the parties’ Stipulation and extend the time period in which Mr.
5 Hirschmann and his family can continue to live in the Hacienda and Sultana
6 properties, and use the two cars, until January 10, 2024.
7
8 Respectfully submitted.
9 Dated: September 14, 2023 NIXON PEABODY LLP
10
11 By:/s/Christopher P. Hotaling
Christopher P. Hotaling
12 Stephen M. LaRose
Christopher D. Grigg
13
Attorneys for Defendant
14 Rolf Max Hirschmann and Relief
Defendants Oceans 19 Inc.,
15 Autobahn Performance LLC, One
Click General Media, Inc. and Opus
16 Collective
17
18
19
20
21
22
23
24
25
26
27
28
17
#:3338
EXHIBIT A
Exhibit A
Page 18
#:3339
From: Patrick Williams <[email protected]>

Sent: Monday, September 4, 2023 1:36 PM
To: LaRose, Stephen
Cc: Hotaling, Christopher; [email protected]; [email protected];
[email protected]
Subject: Patrick Williams statement
[EXTERNAL E-MAIL]
Be Aware of Links and Attachments
Please note, I met with the DOJ, federal agents, and Lim from the SEC on 8/29 2pm PST at the US Attorney office in Los
Angeles, CA and confessed to my crimes. I explicitly told them the truth- that no one but me was aware. I stated this
multiple times. I also sent Jason Pang and Corey MFadden a copy of the written confession via email earlier today. I did
add a few things after meeting with them. The exact letter of confession I sent them is at the bottom of this email. Please
do not notify the prosecution you have received this information from me today until it is necessary.
Let me start by explaining myself and my reasons for sending this letter. When I met with you all in LA on the 29th, I
repeatedly tried to tell you what happened. I tried to give you the details, I tried to give you all the facts. Instead of
listening, you all constantly interrupted me, repeated back information wrong trying to trap me into saying something
you wanted to be true, but that was not the truth. You all kept stopping the intervie w when I tried to tell my story. You
tried to trap me by repeatedly asking the same questions in different ways. You tried to intimidate me into telling you
the story that you wanted to hear, instead of the one that is true. All of you people coming at me made it very difficult
and intense. So in order to clarify and AGAIN give you all the facts without interruption or someone trying to talk
over me, distract me, trap me into saying things that are not true, my words being stopped or twisted, here ya go. I
have spent time going over this to make sure this information is as accurate as I can make it.
Here is what happened.
In the beginning I was watching the cannabis industry start to pop, and saw the rappers and artists I knew getting
involved with it. It just kind of hit me that I should find a way to raise money so I could be part of the all of the
changes the weed business was going through.
I knew from watching that all I needed was an idea and a plan that was good enough to get investors, and I needed
someone to market my idea to help me raise the money.
I bought WCDEV in 2019 and started asking around for a good marketing guy. Was introduced to Max by phone by
mutual acquaintances. It had been relayed to him that I owned a cannabis grow in Las Vegas and more than a
dozen stores, and that I was looking for someone to help me raise money to expand and for ongoing marketing. I
offered Max 10% of every dollar raised, plus bonuses (10% bonuses if the company hit its goals) and 10% for fees +
expenses for all of the marketing material and staff needed.
1
Exhibit A
Page 19
#:3340
I made sure Max was sent all the information he needed to get started, pictures, facts, plans and contracts. I paid
Max's company to build a marketing program for a money raise starting with dispensaries. It was relayed to him
what the deal was and I would offer the investors interest rates up to 36% plus a piece of profit from the
dispensaries. I knew this guy would never help me with marketing if it didn't sound legit.
There's a cultivation in Las Vegas, Qualcan, that was raising money for their own company. I told them I had
investors that were interested in investing in Qualcan who wanted to see their grow. Max was told that Qualcan was
mine. I told him it was available for tours and he could use that place to show investors my grow.
By 2020, I knew I needed to do another raise and keep the money flowing. I bought a second company, INR. Max
received all the information on the new company and said I was going to build a grow house in Adelanto, California.
I had all the details sent for marketing. I started to get paranoid and had someone live- mount computers and phones
so I can manage what was happening.
Even though I had told everyone friends family whoever that I owned cannabis companies, I didn't know much about
the details of the business when they asked me questions about it. A lot of the rappers I know have ownership in
cannabis companies, so their questions were good ones. Those connections were important to help my music
career.
I had met Mike Delgado in an LA strip Club and was told he was a good dude and knew a hell of a lot about weed
and trustworthy. I hired him and his company to help me understand the weed business and stay up to date on
everything about cannabis. I had him drive around and check out dispensaries, grows, whats hot whats not and to
report back to me. I had him driving all over the western united states and paid him a lot of money to give me
information on all of it. The more legit I looked, the more it helped my connections in the music world.
Delgado's information helped me make my personal business and music career look legit. It was well worth the
money I paid him. Delgado never knew anything about me raising money for expansion or investors his job was
100% wholesale retail and merchandising. As far as he knew, I was a big weed company owner staying ahead of
the business and trying to especially beat out competition in the market. He never doubted the job he was doing
wasn't real, and that the company I owned was exactly what I told him it was - a very successful cannabis company.
In 2021 I told everyone that the first build was done in Adelanto. Max was told we raised about 80 million, of which
he had helped bringing about 35 million. I started a second raise in the middle of 2021 or so to double the grow
houses I was "building" in Adelanto.
In December of 2021, I knew in the back of my mind that I couldn't keep making these payments to investors and
continue my lifestyle without running out of money. I began looking for ways out of the contracts without taking down
the whole operation.
2
Exhibit A
Page 20
#:3341
I had a few people call around to a attorneys until they found Ryan Flanagan who was at Smith & Shapiro. I was
interested in bankruptcy, but he said he had a way he could help me to get rid of the debt through making a "private
offering". He said this would "reorganize" the company debt into something like partial ownership for the investors. I
didn't, and don't fully understand what that is, but if it would make my payments go away, I figured it was worth the
cost. Ryan never really like represented me or my company aside from a few basic things and introducing me to
other connections. Through Ryan I was introduced to Dickenson and Wright. DW prepared the documents for the
"conversion" of the old contracts into the new ones. They also handled all of the SEC stuff and let me know when
the contract was approved by the SEC and ready to use. The thing I felt was weird was I was never once asked to
provide license numbers or ownership documents to prove I owned these grows and dispensaries.
I didn't understand how we would get investors to sign these documents, which would make their payments go
away. I discussed this with Flanagan, and he recommended a friend of his who dealt with investors. He said she
could help explain this change to investors. He set up a connection with her, her name is Aia Montgomery.
I spoke with Aia and I offered her 300 Grand to explain the conversion to investors. I explained we were paying out
almost a million a month to investors and the company would definitely go out of business and investors would lose
everything if this didn't work. I had multiple meetings with her on the phone and she had meetings with attorneys
until she had her presentation to investors approved by both them and me. She never once questioned whether this
company was real and repeatedly said she felt comfortable doing this because the attorneys guided her every step
of the way.
DW finished the paperwork in August of 2022 and then Aia started calling investors. The response we received from
investors was great. I thought this would get rid of all of my issues. In the meantime, I had Max continue to raise
money from whoever he could find for an 'Adelanto 2' expansion. I never told him to stop raising funds the way we
had been doing it before. Max had introduced me to an investor named Eric who stated he could fund the whole
deal with his cash raising techniques (he had already brought in a few million dollars). In a private discussion with
him, I offered to give him and his partner 36% plus a percentage of the rev (to reward him for bringing in more
funds) he stated he could keep this running for a very long time and we all could "take down a hell of a lot of cash".
By the end of November Aia had finished speaking to investors. She sent everyone who didn't want to convert to the
legal team for settlements. DW never followed through on contacting all the remaining investors and we complained
about it. About three days later DW fired us for being a 'drug affiliated company' which made no sense at all since
they had known that for over a year. I offered Aia the same money she had made plus some to find new attorneys
and take over handling the legal crap.
Greenberg Traurig took over the settlement negotiations. About a week after they took over, they let me know that
the paperwork DW made wasn't valid unless I could provide a document proving ownership of cannabis grows, and
that we would need other attorneys aside from them to fix it. I told Aia that I had paperwork to prove my ownership, I
just needed to find it. I told her to follow GT's advice and find other attorneys who could fix the issues GT brought
up. I made it very clear I wanted to protect the investors and I needed her help to find attorneys who would help us
fix this. I hoped one of the attorneys she found would be able to smooth this issue over.
Around February of 2023 the INR accounts at Bank of America were closed by B of A even though they never said
why. They gave me a few weeks to get the funds out of the account before it was closed. I paid the bills and wired
3
Exhibit A
Page 21
#:3342
out the remainder of the account balance to Wells Fargo. Then Wells Fargo froze the accounts too. Wells continued
to keep the account frozen for reasons they wouldn't explain for almost two months. I started freaking out because I
had settlement payments that needed to be made, or the clients would cause more issues. I called Tyler and asked
him if I could do something like a business loan between his and my company. I would have someone pay him, and
he would pay my bills. I told him I would pay him to open a new company with bank accounts, I would "loan" him
money and he would pay me back by paying my bills. Tyler said he would do it but it would cost me. I told him I'd
pay him whatever since I was under the gun with these settlement payments.
Eric was still raising money as he had promised to do. Once Tyler had the new INR company opened, I had Eric re-
direct the new funds to the new INR business accounts. Tyler wasn't told who Eric was or that it was investor
money. The Wells Fargo account issues kept going longer than I thought they would. Every month, Tyler would get
a list of people I owed settlement payments to and the amounts they were to be paid for that month.
By April of 2023, Max was told we had raised over 150 million and were already in process of the "Adelanto 2"
expansion. I gave regular updates to everyone on the expansion, which Max and Aia passed on to the investors at
my request. They both truly believed the company was prospering and the investors were growing their money by
owning shares of my company.
In May everything fell apart. Accounts were frozen, I started hearing from the people I hired (Tyler, Delgado, Aia,
Max) freaking out wanting to know what was happening. They had their personal accounts, property, and
businesses frozen and seized. I continued to tell them until I stopped answering their calls that this company is real,
that this is all a big mistake, that the SEC is greedy and going after the little guy. I can't live with the guilt about what
is happening to them on top of the guilt from the investors.
Each of them did legit work. Each of them put in time and labor earning their money. Its my understanding the SEC
is saying they were overpaid, but really top players in this industry get paid way more. Max worked his tail off doing
legitimate marketing. Mike Delgado drove all over the US getting me information I needed to keep myself looking
like an owner of a big cannabis company. Aia worked many many hours dealing with investors and with legal trying
to save the company and investors from losing everything. Tyler handled payroll in a time the company was
desperate to get the settlements paid. All of these people believed in me and this company and thought they were
doing something good.
I have never done anything like this before in my life, and am giving myself up in an attempt to right a wrong. I nev er
imagined this would get as far as it has, and I don't want these innocent people to continue being harmed for my
actions. There is no cannabis. There are no grow houses or dispensaries. This was all a plan to raise money and
get started in the weed business, and it just went the wrong way. None of these people, my employees third party
contractors or investors had any idea that the company didn’t have the assets aside from me and Eric, the man who
brought in last 20 million or so. None of my friends or family or music business associates knew. This was all
something I started.
About some of the questions you all asked me. I don't know which companies on the payment lists belonged to who.
You named a bunch, everyone got paid around the same time usually. Some of the companies were third party
contractors, some were investors, was all the same to me. It wasn't my job to keep track of that shit. And you all
coming at me like I should know every one was crazy. This is why I paid people wasn't it? So I didn't have to keep
track of that shit and I could focus on my music.
4
Exhibit A
Page 22
#:3343
Here's some advice for the future, when someone is trying to tell you the truth and has come forward themselves
without being arrested or anything maybe you should listen. Instead the meeting we had where I could have given
you much more information was ridiculous with all of you trying to stress me out and trap me and interrogate me and
get me to validate the story you want to believe instead of the truth. Maybe you all should have just listened.
I do not have the money to pay my attorney any further. The dude who showed up with me that day wasn't even my
guy. He was some assistant. I do not have the money to retain a new attorney or to pay the one I had cause all of
my assets are frozen. I am requesting a public defender immediately, and will not answer any other questions or
have another meeting until I have one.
Respectfully,
Patrick Williams
--
Patrick Williams
Owner, Patrick Williams Inc.
727-517-5060
5
Exhibit A
Page 23

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Case 8:23-cv-00855-JWH-KES Document 155 Filed 09/14/23 Page 1 of 23 Page ID #:3321

1 Christopher D. Grigg (State Bar No. 220243)

DEFENDANTS’ EX PARTE APPLICATION FOR MODIFICATION OF ORDER

1 to prepare a written statement that he provided to the government and

3  Mr. Williams admitted that he represented INR to be an established

From: Patrick Williams <[email protected]>

Here is what happened.

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