In Silicon Valley parlance, “unicorns” are startup companies worth more than $1 billion. That’s why they’re called unicorns—they’re rare. They don’t happen often, and everyone (read: every investor) is on the lookout to be the first to spot the next one, just before everyone else does.

The first unicorn to emerge from the marijuana sector appeared shortly after Colorado and Washington legalized adult-use marijuana in November 2012. Within two weeks of the first legalization votes and Barack Obama’s re-election, shares in California-based Medbox gained 3,000 percent, from under $3 a share to $215 a share.

Sales flourished. Medbox kept shipping units to dispensaries in multiple states. The company boasted in a series of breathless press releases. At one point, Medbox was worth $3 billion; its founder, Vincent Mehdizadeh, was worth $2 billion.

On paper, anyway.

Forget for a second that Medbox was already publicly traded by the time anyone had heard of it—and on the OTC markets, where grifters tout shady penny stocks and run pump-and-dump schemes. And never mind what Medbox actually did—build medical marijuana vending machines—didn’t really seem to take on with the public. Actually finding a Medbox unit in a California dispensary, or anywhere else, was a challenge.

In the Bay Area, there was one—one!—in a San Jose-area dispensary, supposedly. But who cared, when there was an enormous sum of money to be made by the right people in the right place at the right time?

You might be able to see where this is going.

After the hype-fueled gold rush, came the inevitable crash; rags to riches to rags. Close: This is no Horatio Alger story in reverse—this is the monorail episode from the Simpsons, with a sixth act tacked on, in which the snake-oil salesmen receive justice after skipping town.

Medbox’s stock did crash, and Mehdizadeh was ousted from the now-defunct company, though not before cashing out millions in stock, enough riches to buy a home in an exclusive seaside town near Los Angeles.

Some market watchers called Medbox a “systemic fraud” that would “make [Bernie] Madoff proud.” Outraged investors filed a class-action lawsuit against the company in 2015, alleging that the company worked overtime to inflate its stock value through press releases and media appearances.

And according to charges filed by the Securities and Exchange Commission last week, they were right: It was all a fraud. Medbox really had no sales at all. Its “revenue” was in the form of illegal stock sales to a shell company set up and controlled by Mehdizadeh’s onetime fiancé. And privately, he admitted to it.

“[T]he only thing we are really good at is public company publicity and stock awareness,” he wrote in a text message, according to the SEC. “We get an A+ for creating revenue off sheer will but that won’t continue.”

According to federal investigators, Mehdizadeh conspired with Bruce Bedrick, Medbox’s CEO, and Yocelin Legaspi, Mehdizadeh’s then-fiancé, to set up a fake shell company called New-Age. Bedrick and Mehdizadeh would sell restricted shares of company stock to New-Age. Proceeds from the sales would then appear on Medbox’s ledger as revenue.

As Michele Wein Layne, director of the SEC’s Los Angeles office, put it in a press release, investors “were misled into believing that Medbox was a leader in the burgeoning marijuana industry when the company was just round-tripping money from illegal stock sales to boost revenue.”

Here’s the SEC. As you’ll read, everything Medbox did was thanks to this shell game:

“Revenues from the New-Age accounts receivable deal comprised 22% and 65% of Medbox’s reported revenue in 2012 and the first quarter of 2013, respectively. Within a month, Mehdizadeh caused New-Age to funnel those proceeds back to Medbox, ostensibly in exchange for: dispensary “management rights” that Medbox did not actually own; equipment associated with a marijuana cultivation build-out that never occurred; and the exclusive right to place Medbox machines in Denver, Colorado, notwithstanding the fact that New-Age had no dispensary license in Denver, and no reasonable prospect of obtaining one, either.

Bogus revenues from these transactions, which Medbox falsely described in SEC filings as transactions with a ‘non-affiliated shareholder,’ amounted to nearly 90% of Medbox’s reported revenue in the first quarter of 2014.

In the period of time that New-Age was artificially inflating Medbox’s reported revenue, Bedrick unloaded over 710,000 of his Medbox shares in private placements or public sales, reaping $6,483,180 in total sales proceeds. Mehdizadeh likewise enriched himself through the fraud, selling more than 950,000 of his own Medbox shares for $6,014,048 in sales proceeds. In connection with these sales, both Bedrick and Mehdizadeh signed, as sellers, stock purchase agreements falsely claiming that the company’s SEC filings contained no misrepresentations.”

Medbox was not Mehdizadeh’s first grand mal scheme.

A lengthy investigation published by the Southern Investigative Reporting Foundation revealed that Mehdizadeh and his father had pleaded no contest to charges that they posed as lawyers running a legal referral service, which charged working-class customers for work that never appeared. Mehdizadeh dodged jail time by paying $450,000 in restitution. And soon after, he entered the weed business.

After the DEA raided a dispensary that Mehdizadeh operated in 2007, he shifted away from dealing with the plant and toward penny stocks. Pot-related penny stocks have proven to be a magnet for shady characters; in 2014, the SEC sent an investor alert, warning of “fraudsters… creating losses for unsuspecting investors.”

As part of a plea deal with the SEC, Mehdizadeh has agreed to pay $12 million in restitution and never again be involved with a penny-stock outfit. Charges are still pending against Bedrick, Legaspi and the phony company New-Age.

The drama may not be over. The current “nobody learned anything” post-script is that Mehdizadeh never admitted to any wrongdoing.

He pleaded no contest, which while somewhat as effective as a guilty plea, isn’t.

In a statement, he said he hasn’t read the SEC complaint and doesn’t plan to.

“They have their version of what happened,” he said, according to FOX-43, “and I have mine.”

You can keep up with all of HIGH TIMES’ marijuana news right here.