The following story was originally published in the December 2022 issue of Marijuana Venture.
‘A liar, a financial psychopath, and a human wrecking ball.’
How a con man made his way through the Washington cannabis industry
By Brian Beckley
The following is from three stories Marijuana Venture published in 2022.
Justin Costello was well-known in Washington’s cannabis industry. He was a big personality with big plans, big money and a big mouth.
Publisher’s Note:
Ha! A turd through and through. I had a feeling the first time I met Justin Costello that he was full of it, and it turns out I was right. The thing that amazes me is how conmen can con people who should know better. It reminds me a bit of Donald Trump!
Costello’s story remains one of the most twisted financial frauds we’ve covered at Marijuana Venture, and the convicted felon is now serving a 10-year sentence in federal prison.
Read the 2022 story of Costello’s arrest and the background that led to his charges.
He told people he was a billionaire with famous friends. He had an MBA from Harvard, had seen combat in Iraq and owned a private jet. He had plans to become a cannabis tycoon, with schemes that ranged from banking services to a billion-dollar stock play to automated drones that would deliver up to 85 pounds of cannabis from licensed wholesalers to cannabis dispensaries in the Pacific Northwest.
But, of course, none of it ended up being true.
So it was not a surprise when on October 4, 2022, after a brief period on the run from the FBI, Costello was arrested in Southern California on 22 felony counts of mail and wire fraud and three felony counts of securities fraud in a nearly $35 million fraud case.
According to the 37-page indictment handed down September 28 by the U.S. District Court for the Western District of Washington, Costello, 42, not only lied about his background, his family and his wealth, he allegedly did it to defraud business owners within the cannabis industry, as well as investors looking to be a part of it.
According to the indictment, Costello in 2017 owned and operated a company called Pacific Banking Corp. that provided banking services to marijuana businesses. Between 2019 and 2021, Costello allegedly diverted money from three marijuana businesses to benefit himself.
“And we’ve alleged that he diverted at least $3.7 million of three marijuana businesses’ money to other purposes,” says Assistant U.S. Attorney Justin Arnold, adding that Costello promoted his company as a “go between” connecting cannabis businesses with the traditional banking industry, which typically does not deal with the still-federally illegal business.
According to the Department of Justice, as part of his scheme, Costello purchased two companies that were trading for pennies on the over-the-counter market and renamed them GRN Holding Corporation and Hempstract Inc., then recruited investors with his tall tales.
Costello used the same lies with other investors and allegedly used investor funds for his own expenses, including at least $42,000 for costs associated with his wedding. In all, some 29 investors invested directly with Costello and lost $6 million because they relied on Costello’s false representations.
In 2019, Costello’s GRN Funds, LLC purchased the outstanding shares of Discovery Gold Corp., changing the name to GRN Holding Corp., and continued to lie about his background on SEC filings, as well as lying about possible acquisitions to boost share prices. Between July 2019 and May 2021, 7,500 investors lost about $25 million after purchasing and selling GRN Holding Corp. stock.
As his notoriety grew, Costello grew flashier, becoming known throughout the industry for his over-the-top personality. To at least one cannabis executive, he sent pictures of himself, shirtless in a boardroom with a pair of handguns tucked in his waistband. On another occasion, he dropped $10,000 on the one-ounce, 15-inch, 24-karat gold-wrapped cannagar known as “El Dorado” after meeting the owner of the high-end retailer that featured it.
There were other incidents with Costello that pointed to larger issues, such as a 2019 arrest in Snoqualmie, Washington, for allegedly threatening employees at a casino both physically and with financial and physical retribution, and then threatening the police officer, according to charging documents.
According to the documents, after his arrest, Costello repeatedly told the officer that he “messed with the wrong dude” and told officers he was a billionaire. Costello allegedly threatened to sue the officer and repeatedly asked him where he lived, telling him, “I’m going to find out who you are.”
“You should be very scared of me,” Costello allegedly told the officer. “This is going to cost you, brother, a lot of money.”
While being read his rights, Costello allegedly told another officer, “Do you know who I am, bitch? Google me, mother*cker.” During transport, Costello added, “Bro, take these handcuffs off so I can kick your ass.”
A Washington cannabis lawyer familiar with Costello and his case says he was surprised at the level of specificity and “great deal of evidence” to be found in the court documents. The attorney, who never represented Costello, but did represent cannabis business owners who knew him, said he had “never seen anything so brazen” and speculated that was one of the reasons he was taken seriously inside an industry that wanted to believe he could solve their banking issues.
“You can’t even contemplate that somebody would engage in that level of blatant, open deception,” said the attorney. “It’s almost like a grift from a TV show.”
Costello in May 2023 was sentenced to 12 years in prison and three years of supervision for securities fraud following a sentencing hearing in Seattle that included statements from victims describing how badly Costello’s schemes upended their lives, including one woman whose husband committed suicide after falling for Costello’s scheme.
“Throughout history we’ve seen people try to take advantage of new industries, defrauding investors and businesses that have limited knowledge of the proposed enterprise,” U.S. Attorney Nick Brown said in an email to Marijuana Venture. “Mr. Costello engaged in old-fashioned fraud, taking money from investors under false pretenses and defrauding marijuana businesses of their income. He used the new and uncharted nature of the marijuana marketplace to hide his old-fashioned fraud from investors and businesses that fell for the tall tales he peddled.”
The sentence from U.S. District Judge Ricardo S. Martinez, who said at the hearing that Costello’s crimes “caused a severe impact financially, and a severe emotional impact” was two years longer than requested by prosecutors.
“Nothing with Costello was real,” one victim told the court, according to the release. “We were groomed by this predator.”
“He is a liar, a financial psychopath, and a human wrecking ball,” said another.