A San Luis Obispo County Superior Court judge ruled on Oct. 21 that local cannabis businessman Helios Dayspring may stay at the helm of his Natural Healing Center brand while a fraud and misconduct lawsuit filed by his top investor plays out.
Judge Tana Coates denied investor William Szymczak's preliminary motion to install a neutral third-party to run the company, which has a dispensary in Grover Beach and entitlements for dispensaries and farms throughout the Central Coast.
- Rendering Courtesy Of The City Of Slo
- IN CHARGE Helios Dayspring is still the manager of Natural Healing Center after a judge denied an investor's motion to remove him from his position.
"Plaintiffs allege a receiver must be appointed to prevent further mismanagement and maintain transparency while this litigation moves forward," Coates wrote in the ruling. "The main problem ... is that plaintiffs haven't demonstrated that other less onerous remedies are inadequate."
Szymczak, a former U.S. Department of Housing and Urban Development official, is suing the cannabis business partner who he invested at least $15 million into in 2018. Among his allegations are that Dayspring siphoned millions of dollars in company funds for himself, including to fend off IRS and FBI investigations.
Dayspring, a Morro Bay High School grad who founded the company, is denying the allegations. His attorneys told New Times that the lawsuit is chock-full of "misrepresentations and distortions of facts" and "procedural defects."
In the Oct. 21 decision, Coates ruled that Szymczak failed to show that "irreparable harm" would result if Dayspring stayed on as manager while the litigation continued. The company's operating agreements gave "Mr. Dayspring wide latitude in managing the companies," she noted.
Coates also wrote that the defendants raised legitimate questions about the veracity of Szymczak's allegations, citing testimony from the company's chief financial officer defending Dayspring and recent emails between the partners-turned-foes discussing their future plans.
"Receivership is a last resort," Coates wrote. "Plaintiffs request a drastic remedy without demonstrating why such a drastic remedy is the only viable option."
In a statement to New Times, Szymczak attorney Miles Feldman said that the lawsuit, which seeks a full company accounting, damages, and Dayspring's permanent removal as manager, will move forward.
"The Court did not exonerate Helios Dayspring in any way," Feldman said in a statement. "The court stated that Mr. Szymczak's allegations should be pursued through this lawsuit. Mr. Szymczak will do so." Δ