By Lauren Berg

Law360 (July 9, 2020, 4:30 PM EDT) -- A New York federal judge on Thursday appointed Pomerantz LLP as lead counsel to represent iAnthus Capital Holdings Inc. investors over claims the cannabis company tried to use the coronavirus pandemic to explain away a missed $4.4 million interest payment, after four firms vied for the position.

U.S. District Judge Lewis A. Kaplan appointed Jose Antonio Silva, who claims he lost more than $2.2 million in the alleged scheme, as lead plaintiff and appointed Silva's attorneys from Pomerantz as lead counsel.

Last month, Pomerantz was one of four firms vying for the role, along with Glancy Prongay & Murray LLP, The Rosen Law Firm PA and Robbins LLP.

The proposed class action asserts that iAnthus made false and misleading statements about its expanding business operations without disclosing to stockholders that it did not use escrowed funds to make necessary interest payments. On April 6, iAnthus announced it had defaulted on $4.4 million in interest payments to the private equity firm Gotham Green Partners because of the coronavirus pandemic, as well as a decline in cannabis markets overall.

The shareholders said shares of the company's stock fell $0.29 per share to close at $0.179 per share that day, according to court documents.

The investors said iAnthus entered into a $50 million debenture agreement with Gotham in May 2018, which provided for the withholding and escrow of more than $5.7 million to pay one year's interest on the 2018 debentures in the event of an iAnthus default. That agreement was amended in September to provide an additional $20 million to iAnthus, according to court documents.

Neither company disclosed why the escrowed money wasn't used to satisfy iAnthus' interest obligations, shareholders said. And if the funds were unavailable for the interest payments to Gotham, iAnthus "intentionally, or recklessly, failed to disclose such information rendering the earlier statements concerning the availability of the escrowed funds materially false and misleading," they said.

Melvin Fussell, represented by Robbins LLP, said he incurred losses of about $150,000, while Robert Dankner, represented by The Rosen Law Firm, said he incurred losses of about $280,000. Robert and Sherri Newblatt, represented by Glancy Prongay, indicated in their filings that they incurred a combined loss of more than $1 million.

Shareholder Donald W. Finch filed his proposed class action on April 20, and a related proposed class action brought by Peter L. Cedeno was filed on May 5, according to court documents.

In the order on Thursday, Judge Kaplan granted their motion to consolidate the cases.

A separate case brought by Finch's counsel against the companies was voluntarily dismissed the same day his suit was filed.

Counsel for Fussell declined to comment on Thursday, and counsel for the other parties did not immediately respond to requests for comment.

Finch is represented by Timothy J. MacFall of Rigrodsky & Long PA.

Silva is represented by Jeremy A. Lieberman, J. Alexander Hood II and Patrick V. Dahlstrom of Pomerantz LLP and Peretz Bronstein of Bronstein Gewirtz & Grossman LLC.

Fussell is represented by Brian J. Robbins and Gregory E. Del Gaizo of Robbins LLP, and Thomas G. Amon.

Dankner is represented by Laurence M. Rosen and Phillip Kim of The Rosen Law Firm, and Frank R. Cruz.

The Newblatts are represented by Robert V. Prongay, Gregory B. Linkh, Charles H. Linehan and Pavithra Rajesh of Glancy Prongay & Murray LLP.

iAnthus is represented by Seth L. Levine, Chad Albert and Katie G. Crane of Levine Lee LLP.

Gotham Green Partners is represented by Ian M. Turetsky, Carla M. Wirtschafter, James L. Sanders and Jason T. Mayer of Reed Smith LLP.

The case is Finch v. iAnthus Capital Holdings Inc. et al., case number 1:20-cv-03135, in the U.S. District Court for the Southern District of New York.

--Additional reporting by Sarah Jarvis and Dean Seal. Editing by Nicole Bleier.

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