Someone Is Lying: Kubby Fired By Cannabis Science;
Accuses Melamede and Cowan of Theft, Etc.
Are You A Thief If You Don’t agree With Me?
by Richard Cowan
Cowan@MarijuanaNews. com
The Kubby/CSI dispute involves some very complicated issues, but my decision to vote to remove him as CEO was based on a few very simple points:
First, when someone tells me that if I disagree with him I am therefore a thief, then I really must disagree with him.
Second, when agreeing with him would require me to falsely accuse two people of theft, and I do not believe the accusations be true, I would have no choice. It is a question of morality, and simple decency.
Besides, I have been slimed before, and there is too much “collateral damage” to the stakeholders, including those who need cannabinoid medicine.
Third, when one of the persons being targeted is a leading figure in cannabinoid science, and therefore the company’s most valuable employee, and if he were driven from the company under circumstances that would make it almost impossible to replace him with anyone who was not desperate, it is a question of good business.
The point is that Cannabis Science Inc. can be rebuilt by Dr. Melamede, but it cannot be rebuilt by Kubby.
Fourth, when I become the target of absurd extortionate threats, I have to conclude that the person making those threats and accusations really should not be running a public company.
Finally, when the person accusing others of theft is using company funds for his own purposes and is ignoring the basic practices of corporate governance and doing actual harm to the company, we really must act.
Below you will find a very abbreviated history, and some of the recent emails between Kubby and me.
After you read them, I think you will understand why I acted as I did, but if you still think that I have looted Kubby’s billions, please tell everyone that I spent it all on sex. That would do wonders for my reputation.
RC
History:
In the Spring of last year, Steve Kubby called me and said that some wealthy friends of his had expressed interest in the pharmaceutical cannabis business, and he was sure he could raise a significant amount of money for such a venture in a short time.
I had been acting as Kubby’s “campaign manager” in his unsuccessful bid for the Libertarian Party presidential nomination, so he asked me if I would serve as the Chief Financial Officer, because – many years ago – I had had experience in corporate finance, and he wanted someone he could “trust” in that position. (You will soon see the irony in that, but it seemed logical because I had been defending him through all of his legal difficulties, since his arrest in 1999, and had nominated him for the LP Vice Presidential candidacy in 2000.)
I agreed, but Kubby was only able to raise $50,000 from a wealthy neighbor, and that was all that he was ever able to raise, with some dubious exceptions, which we will hear about soon.
Kubby was, nonetheless, able to recruit Dr. Robert J. Melamede as the company’s “Chief Science Officer”. Dr Melamede is one of the world’s most respected authorities on cannabinoid medicine, so that was something of a coup. A friend of Dr. Melamede also introduced us – by telephone – to a fellow in Vancouver, Raymond Dabney, who could arrange a “merger” with a public company, which might make it easier for us to raise money. We knew that Dabney had had some problems with the SEC, but we did not consider them serious enough to prevent us from doing business with him. He was the victim of some bad legal advice, but it makes him an easy target.
I went to Vancouver and negotiated a deal, but the stock market crash killed it before we could raise any financing. We put together another deal, but everything that could go wrong did, and no one was able to raise any money.
Needless to say, I was not getting paid, and I was also feeling my age (I am now 69), and I kept telling Kubby that I did not want to continue as CFO. He asked me to stay on in just a nominal capacity, because he wanted to have someone he could “trust.” During all this time, my stress was greatly aggravated by the problem that Kubby simply could not grasp the nature of public companies, and he said that he did not want to deal with corporate finance. In other words, I realized that I had made a serious error.
Inasmuch as we had been unable to raise cash to pay for essential corporate services, Dabney proposed that we use a provision in the SEC rules that would allow us to issue shares for them. The Board – including Kubby – approved the proposal unanimously. I am not an expert on securities laws and/or SEC regs, but the deal was vetted by the company’s lawyer and the shares were issued.
I have found Dabney to be both competent and honest, and he has always insisted that everything be done in a legal and honorable way. However, he and Kubby have never gotten along well.
In the meantime, Kubby had moved into a large house in the Oakland hills, and was having trouble paying the rent ($3,000 per month). The company’s bills were also mounting, and Kubby was complaining about stress and urging Dabney to sell stock at any price, so he would not be evicted. (Kubby sent that email to all of the company’s employees, and that began a series of increasingly bizarre messages.)
Finally, on June 25th, I insisted that my resignation as CFO finally be accepted.
Excerpt:
“I have been saying for some time that I do not feel qualified to serve in this capacity, and my inability to produce results speaks for itself. Although my health problems are not “life-threatening”, it is clear to me that I do not have the stamina to do the job properly.”
Here is Kubby’s response on the same day:
“Richard,
I regretfully accept your resignation, but only because this appears to be affecting your health. The last thing we want is for your health to suffer.
As for your, “inability to produce results,” I must remind you that the ultimate responsibility for these decisions rests with me. You advised me, but I was the one who committed us to a program that has not produced the results we all anticipated.
I do think you should continue as a Director of CSI.
On behalf of the entire Team, please accept our profound appreciation for the work that you’ve done on our behalf.
Best wishes,”
Steve
Then just a week later, on July 2, I received the following email:
from Steve Kubby <steve@kubby.com>
to Richard Cowan <richardccowan@gmail .com>
date Thu, Jul 2, 2009 at 6:38 PM
subject Confidential
Full text:
“Richard,
You know me well enough to know that I never bluff and I never back down.
I want you to send me ALL the stock certificates and CFO files you are holding by Monday, July 6th, or I will file charges against you for stock fraud, embezzlement, and bank fraud.”
Steve