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Medical marijuana update: Creative Edge (FITX) CEO faces questions over Facebook flap

Chris Parry Chris Parry, Stockhouse.com
14 Comments| July 9, 2014


CEOs of public companies take a variety of stances on how to deal with critics. Most ignore them. Some threaten to sue. Others, once in a while, actually do.

Creative Edge Nutrition (OTO:FITX, Stock Forum) CEO Bill Chabaan appears to have a different approach.

He seemed to return to Facebook Wednesday after a short board-imposed ban from the company account, with a series of posts in which he appeared to have ‘outed’ a critic of the company who uses a pseudonym on Twitter, posting the critic’s name, job and personal address details to shareholders.

The object of the outing was a Twitter user who goes by the name of ‘The Wolf of Weed Street,’ who has recently become the subject of much buzz after he and his Twitter followers made substantial profits – and, more recently, losses - buying en masse into marijuana stocks in the US.

The outing tactic followed several weeks of @WolfOfWeedSt tweets asking why Creative Edge stock prices were taking a daily dive at the open of trading, and openly wondering whether the billions of shares in the company that had recently become free-trading were being sold by insiders, who Chabaan told me earlier this year were mostly family and friends.

I personally posted similar questions just yesterday to Twitter after noticing another big early drop.

In response, Chabaan posted a picture of ‘The Wolf’ to his company Facebook page with text below reading “Jason… John Germinario [FITX’s compliance advisor] says hello and welcome to the party. It will be great to have your trading practices vetted by the SEC.”

fitx.jpg

The post ended, somewhat ironically, with the sentence, “We are ALL accountable for our actions and words.”

Chabaan also posted details of The Wolf's company details and social media accounts that referred to his day job.

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In response to overwhelmingly negative feedback over the move, Creative Edge later deleted the ‘outing’ posts as FITX stock began to fall and online criticism of the company’s actions reached fever pitch. A #SackChabaan hashtag was soon in use on Twitter.

No mention yet from the company of how the CEO might be made ‘accountable for his actions and words,’ and Chabaan had not made himself available for comment at the time of writing.

Numerous FITX shareholders reported having posted negative responses to the outing earlier in the day, only for their Facebook responses to be subsequently deleted and their accounts banned from the company page.

A screenshot of some of those comments follows:

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I was able to reach The Wolf, as he prefers to be called, late in the day, and he was utterly bemused by what happened.

“Isn’t it nuts?” he said from his Florida home Wednesday. “I’m not saying things that people haven’t been posting about this company everywhere else. People ask me what I think and I say I don’t like the daily stock dump, and he does this. I don’t get it.”

The Wolf says he hasn’t had any contact with the company previously, hasn’t been contacted by management, and never saw this coming.

“Today was the beginning,” he said. “I’ve never had any communications with Bill in any way.

The Wolf was in a meeting with executives from a marijuana company he is doing due diligence on for his subscribers when Creative Edge’s Facebook vengeance began.

“I’m sitting there and my phone started blowing up, so I excused myself, looked at the links everyone was sending me and saw what he put out, and I was just…I don’t understand what he was trying to accomplish by that. He just made himself look like a child. I’ve never seen a CEO of a public company act like that before. It’s surreal.”

The Wolf has been critical of FITX for months, but he’s not exactly alone in his criticisms. The Facebook posts from Creative Edge suggest, however, that the company has been spending time and money digging into his background when, he says, they should be focusing on giving Health Canada what it needs to finalise their license.

“I’ve been saying something weird is going on with this stock since it was at 9c,” he told me. “I said that it’s dead money and now what? It’s down 40% since then. And every day we talk about it in our subscriber chat and people say, ‘here it comes, here comes the share dump.’ It’s like clockwork.”

Though posting the personal address of a critic to the shareholders potentially losing money on his criticisms, The Wolf says he’s not concerned about the posting of his personal details because coming to his door might be a supremely silly thing to do.

“Is someone really going to show up at my door?” he asks. “They can try. But Florida is a ‘stand your ground’ state.”

Chabaan has taken a lot of heat online since the Facebook postings appeared, and though The Wolf isn’ concerned about getting a brick through the window, he’s actively considering his legal options.

“For someone to intentionally try to put me in danger because I asked a question is a real low point, you know? It’s embarrassing and it’s foolish. I don’t even know what type of laws might have been broken in a privacy sense, or by putting me in danger; I’m going to look into that. But what did he accomplish? Go look at Investor’s Hub; it’s a freaking mutiny, everyone’s pissed. On twitter too.”

The Wolf considers the situation to be a giant red flag to shareholders.

“It’s an emotional marketplace and that was just a poorly calculated move. He’s playing checkers when he should be playing chess. But you know, if anything, my twitter followers went up, subscriptions on the website went up. We want to identify the good companies and the bad companies and ask questions to get good information. If we don’t get good answers, we question why. I wonder if he’s going to get a Health Canada license when he’s doing this kind of thing? I hear from Canadian CEOs in this space all the time, and a lot of people don’t think he’s getting a license. How would Health Canada look at this kind of activity? Do they want him growing pot?”

I asked The Wolf what he’d do in Chabaan’s situation and his first suggestion was to issue a public apology.

“If I’m sitting on that board, I’d want the leader to make wise decisions and not emotionally charged decisions. He’s not thinking. He realised a little too late in the day that it was wrong and he took it all down. But now it looks worse. Now he’s admitted it was a dumb move by his actions. And then, why censor those making comments? Those are your shareholders and you’re banning them from the site?”

I asked The Wolf what he’d do if he somehow found himself in the role of CEO of Creative Edge tomorrow, and his answer was quick and certain.

“I wouldn’t accept the position. There’s nothing I could do. The damage has been done, in my mind. I wouldn’t want to sit on that board. I wouldn’t want shares. I wouldn’t take the job.”

FULL DISCLOSURE: I have recently interviewed both Chabaan and The Wolf in the last few months, as online pissing contests are not unfamiliar to either of them and such things make for news when share prices move as a result.

The Wolf’s 20,000 Twitter followers were recently embroiled in a war with shorters of their stock picks, while Chabaan had some choice things to say about me when I castigated him for making claims his business model didn’t appear able to back up.

I opted to quit covering the company when the FITX board asked Chabaan to stop posting to social media, and when it appeared Chabaan was going to stop making grandiose claims around his stock. Everyone gets a second chance, especially in the medical marijuana space, where a lot of companies are learning on the job.

But today’s activity by Chabaan, in my opinion, takes a sharp turn to the legally actionable. Posting a stock critic’s personal address details to investors has the potential to turn into a life or death situation, something that was rammed home when I asked The Wolf if I could use his name in this article, now that it’s out there for those who choose to look for it.

He refused, saying ominously, “[Chabaan] posted my home address. I don’t want to shoot anyone.”

UPDATE:
In other ‘sue me’ news, still no word from Easton Pharmaceuticals (OTO:EAPH, Stock Forum) on whether they plan to actually go through with their news release announcing they would sue a blogger who says management emailed him threatening to sue him if he didn’t recant negative statements made about the firm.

I spoke with Seeking Alpha blogger Matt Finston Tuesday night and, though he had stated earlier in the day that he wasn’t interested in countersuing unless Easton followed through on their threats, he later told me he was concerned the company news release was harming his reputation in the financial world and that he may be forced to seek damages.

Finston was steering clear of social media Wednesday while he consulted with attorneys.

Easton, according to recent financials, has around $500k in the bank with about the same figured owed.

The news release in question, headlined “Easton Pharmaceuticals Announces Legal Action Against Seeking Alpha Writer as a Response to Libelous Article,” did not appear to have been lawyered (or spell-checked) before it was released, and the company appears confused as to whether it was slandered or libeled, indicating it either has very weak legal representation or hasn't used what representation they do have.

The release said, “Easton Pharmaceuticals was the victim of a slanderous article by a Matt Finston of seeking alpha posted in March of 2014” and that Finston's piece was “a clear attempt to purposely provide mis-leading and libelous information in an attempt to assist in possibly shorting the company's common stock by any means necessary.”

The release continued that Easton has entered into discussions “to join with 1 to 2 other companies in a joint legal response.” No other company was named, and no actual legal action was referred to.

In other news, an unnamed privately held B.C. marijuana play learned today they have been approved for their MMPR. I’ve been asked to keep the name of the company schtum for now, but it’s important for shareholders of other companies going through the LP process to know that Health Canada is still at work, if slowly.

Creative Edge shareholders continue to wait to join the numbers of the licensed.
 
--Chris Parry
http://www.twitter.com/chrisparry

UPDATE: Just received an image from Finston, mentioned above, who says he too has been threatened by Chabaan for writing negative things about the company and has the evidence to prove it.

finston.jpg

Jeez.


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ajyinvests
They "keep him as a writer" because like wolf and matt he has the balls to scream out when emperors have no clothes. Way to go again CP. I've said it a million times before, i'll say it again, for this sector to gain big money credibility it needs to behave credibly starting with it's CEO's. Bill C. is a clown and childish embarrassment to the entire sector.
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July 10, 2014
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lucass81
I believe Bill has worked very hard to get the company and BOD and the facilities built and he believes very strongly in what is has accomplished and wants to accomplish. People like you Chris and Finston are on an ego trip, When you call Bill a clowm and childish, perhaps you should have a good look at yourselves before you critisize someone else. If you can look through someone elses eyes and realize how much work and effort it is to start a new company and have bashers like yourselves si...
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July 10, 2014
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lucass81
Well it appears that the end of my message was whiped out, I guess you find it hard to take critisism, like the way you like to give it out.
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July 10, 2014
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StockGru2013
How sad of a CEO to stoop to that level. Keep the pressure up on Creative Edge, their seems to bee some fishy stuff going on over their, which shareholders need to know about. Keep up the good work.
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July 10, 2014
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BCtrader
#shortfitx
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July 10, 2014
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JAYLIN
My guess the private company is Agrima, since they are now accepting pre orders on their site. Oops
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July 10, 2014
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cparry
Biloshi: I answered your question in the article.
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July 10, 2014
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biloshi
Hi Chris, Once you are finished putting the boot to companies you don't like how about some real journalism and maybe get some answers to some of these questions: How come Health Canada has only issued one MMPR licence to a public listed Co. to date? Do they plan to issue any more and if so when? At what stage are they, have they done any pre-licence inspections in the last 3 months? I am sure there are many invested in this sector who would be happy to get some feedback! Than...
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July 9, 2014
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BaystreetBenny
Watch RPX.v Just Raised $3M @ $0.05 a few weeks ago....Summer LOW Trading @ $0.015..Crazy ! 21,000 meter Drills Program NOW Underway....Drills Turning on Massive VMS property Near KIDD Mine Area...Drill Results will Soon Start Rolling IN.
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July 15, 2014
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keepitrealhomie
Wait until the license comes through. this is going to dollars. Believe it.
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July 9, 2014
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