A top investor in one of San Luis Obispo County's most prominent cannabis businessmen described him in a recent lawsuit as an "unscrupulous con man" who's siphoned company funds, is in hot water with federal authorities, and should be removed as head of his businesses.

Helios Dayspring, co-owner and founder of Natural Healing Center dispensary in Grover Beach, faces a civil lawsuit from 81-year-old William Szymczak—an early supporter and investor and a former director in the U.S. Department of Housing and Urban Development (HUD).

The lawsuit filed on Aug. 17 in SLO County Superior Court claims that Szymczak recently learned that the companies he invested at least $15 million into in 2018 were being "grossly mismanaged" by Dayspring—pointing to criminal investigations, late tax payments, and the alleged diversion of millions of dollars in company funds for Dayspring's benefit.

Asserting fraud, breach of contract and fiduciary duty, and other claims, Szymczak is asking a judge to appoint a neutral receiver to take over company management until the litigation plays out. A court hearing on the motion is slated for Oct. 21.

"Unless a receiver is appointed, the companies cannot operate properly," Szymczak's lawyers argue in court filings, "they will continue to be drained of funds, and they face irreparable damage ... that would cause creditors to go unpaid and jobs to be lost forever."

Among Szymczak's claims are that Dayspring used company funds to pay for his personal legal expenses related to FBI and IRS investigations, that he distributed more than $1 million in profits to himself this year without paying any to Szymczak, and that he improperly advanced money from his Grover Beach dispensary to other fledging projects while the companies fell into "financial peril."

Dayspring, a well-known Central Coast cannabis entrepreneur and Morro Bay High School grad, is "vigorously denying" the allegations. In court filings, Dayspring called the lawsuit "a transparent attempt ... to try to seize for himself alone the highly successful cannabis business that I started about a decade before Szymczak's involvement, which I have successfully managed and grown."

In a statement to New Times, Dayspring's attorney, Marc Smith, said that the lawsuit "asserts numerous misrepresentations and distortions of facts."

"We are confident that the evidence will show that the allegations made by Mr. Szymczak are without merit," Smith said.

Szymczak's attorney, Miles Feldman, countered in a statement to New Times. "Bill seeks full transparency, sound business practices, and compliance with all applicable cannabis laws and regulations. Bill looks forward to presenting all of the facts and evidence to the judge and a jury. Bill believes that sunlight is the best disinfectant," Feldman said.

The dispute hits as Natural Healing Center was poised to open two new dispensaries in the cities of SLO and Morro Bay and commence cannabis farming activities throughout SLO County, as it's received several scarce land-use permits from local governments. The company also recently purchased a building in Orcutt for a future dispensary and has operations underway in the Central Valley.

Ugly breakup

Szymczak's lawsuit weaves a story of a once-promising business partnership gone awry after he was "shocked and horrified" to find out that Dayspring—in increasing legal and financial trouble—had been "using company funds as though they were his own private checking account."

In contrast, Dayspring and his colleagues portray Szymczak as a "formerly happy, now disgruntled" minority owner who was fully aware and supportive of Dayspring's management decisions.

In court filings, Dayspring claimed he and Szymczak were "incredibly close."

Their partnership began in early 2018. Szymczak, a career real estate executive and former senior official at HUD, was looking to plant a stake in California's newly legalized cannabis market. Dayspring, already in the cannabis industry before Proposition 64 passed, needed investors to help him grow his existing enterprise in SLO and Santa Barbara counties.

Persuaded that Dayspring was a good bet, Szymczak invested at least $15 million to help him buy property to pursue his cannabis ventures, which included a portfolio of local farms and a dispensary in Grover Beach, according to court records. In return, Szymczak received a 30 percent ownership stake.

"Dayspring assured me that he was meticulous and ethical in his business dealings and was specially situated through his local relationships to work effectively with the appropriate regulatory, permitting, and licensing committees and the key officials," Szymczak wrote in court filings.

In mid-2018, Natural Healing Center opened in Grover Beach and Dayspring applied for cultivation permits in SLO County. In the ensuing months, the company also secured dispensary permits in SLO and Morro Bay and began discussing plans for Lemoore, Orcutt, and Turlock.

But, according to Szymczak, the venture began to unravel in 2020. Court records indicate that Dayspring is facing investigations from the FBI and IRS and that earlier this year, the FBI searched his home on Los Osos Valley Road.

While the FBI declined to comment on any investigations, Dayspring acknowledged the inquiries and search in court documents—tying them to "a potential tax liability from the Proposition 215 time period," or before recreational cannabis was legalized.

In May, Natural Healing Center hired a new chief financial officer, who, according to Szymczak, began sharing more detailed financial reports on the businesses with him—reports indicating that the businesses were running out of cash.

After that, Szymczak said he discovered Dayspring's alleged use of company funds for personal legal expenses, his "direct" taking of cash without making distributions to other members, late payments on company taxes, and use of funds to subsidize other dispensary projects in which Szymczak did not have a stake.

While Szymczak described Dayspring's conduct as fraudulent and self-dealing, Dayspring denied that he acted improperly. He said that Szymczak "greenlit all of my movement and my actions" and claimed he was given "full approval ... to invest all proceeds from Natural Healing Center in any way I chose." The company's chief financial officer, who provided the reports to Szymczak, wrote a declaration in court defending Dayspring, calling the allegations "misleading and inaccurate."

Szymczak is asking a judge to appoint a receiver to run the company while his litigation pursues a full financial accounting of Natural Healing Center and its ancillaries; a declaration of rights between all its members; damages; and the permanent removal of Dayspring as a manager.

"I had trusted Mr. Dayspring to use my capital and our profits for our shared benefit through the businesses he was running," Szymczak said in court records. "I gave him wide breadth to do so, too wide as it turns out, and I put far more trust in his judgment than I should have." Δ

Assistant Editor Peter Johnson can be reached at [email protected].