A Texas hemp broker who hired a La Pine-based lab to turn its plants into CBD oil has filed a civil suit seeking $18 million in damages for alleged fraud.
When Integrity Distribution Partners LLC hired Juniper Biolabs Inc. to make CBD oil, the two firms agreed on price and the type of product that would result from processing the plant material, according to a lawsuit filed in Deschutes County Circuit Court.
Integrity also filed for a temporary restraining order, which is scheduled for a hearing on Monday. Integrity is asking the court to stop Juniper Biolabs from selling any of the product. The damages represent the revenue that was promised.
When the two companies entered into the agreement, Integrity’s owner was told that Bend’s Juniper Analytics Inc. was a partner in the lab, said Matt Goldberg, a Portland attorney hired by Integrity.
That relationship and the price Juniper promised were two key reasons Integrity chose the firm, Goldberg said.
The two companies signed an agreement in January, but by May, the deal unraveled.
“Every deadline was missed for delivery of the product or the money they agreed to pay,” Goldberg said. “Integrity can’t get a consistent answer no matter what it does.”
According to court documents, Chris Gunson of Gunson Brothers Farms in Bend connected Integrity to Juniper Biolabs through a mutual friend. Juniper Biolabs’ listed owner, according of Oregon business registration filings, is Carl Carnagey, who is also named as a partner in Juniper Analytics and is listed as someone with “direct knowledge of the operations” for Juniper Biolabs.
Gunson referred additional comments to his attorney Sandra Gustitus, who did not return calls from The Bulletin.
“I have no comment,” Gunson said. “It’s a frivolous lawsuit. We’re Gunson Brothers Farms, but the lawsuit is multifaceted and has to do with multiple things going on.”
Court documents, including copies of text messages and emails, give this account:
Integrity was looking for a processing company to turn hemp into CBD oil. Gunson, who was introduced to Integrity through a mutual friend, said he was a shareholder with Juniper Biolabs.
The two companies signed a so-called tolling agreement where the lab would process raw hemp into THC-free CBD oil that Juniper would sell for $7,600 per liter.
Based upon the contract, Integrity expected to make a combined $10.4 million in net profit for March and April 2019 and $6.9 million in May. Processing was to begin in February, but was delayed until March 20. At that point, Integrity was told the lab wasn’t prepared to extract from raw plant material, but could process crude CBD oil.
Gunson asked Integrity to wire $875,000 to purchase from Gunson Brothers Farms crude CBD oil to be processed.
By April 29, communications broke down and a representative from Integrity visited the lab in La Pine. He was told that his product was at a sister facility that was in Eugene.
By May 7, Integrity says it was told that the hemp oil was made into a different product and sold at a lesser price. The agreement called for both parties to agree on price and terms of any product sale other than what was stated. A week later communication stopped.
“Since dispossessing Integrity of $875,000 through outright fraud, defendants have lied, lied some more, and then lied again about the whereabouts of Integrity’s money and the products made from inventory purchased with Integrity’s money,” the lawsuit states.
— Reporter: 541-633-2117, firstname.lastname@example.org