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A commercial building at 111 Brockhouse Road in Etobicoke, On., is photographed on Tuesday, Dec.,3, 2019.

Christopher Katsarov/The Globe and Mail

Toronto police have charged two men with fraud after an aspiring cannabis edibles company took possession of a west-end commercial bakery that it purported to have purchased when in fact, police allege, it hadn’t.

Two principals of Easton Pharmaceuticals Inc., which is traded on the over-the-counter market in the United States, have been charged with fraud and using a forged document in connection with the company’s purchase of a 36,000-square-foot bakery known as Supreme Sweets, Toronto police said in a statement. The charges have not been proven in court, and Easton denied the allegations on Tuesday.

The statement said the force’s financial crimes unit in October arrested and charged Easton chief executive officer Evangelos Karayannopoulos, 49, (also known as Evan Karras) of Oakville, Ont., and Vincent DeMasi, 51, of Toronto, who has previously been identified as Easton’s chief operating officer. Each man faces one count of fraud over $5,000 and one count of use of a forged document.

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On April 24, Easton said in a news release that it had acquired the bakery, which it said positioned the company to “enter the cannabis edibles market.”

Toronto police alleged, however, that on the April 24 closing date for the sale, there was “no money exchanged” for the purchase of the property.

“Despite this, the two men had taken possession of the 36,000-square-foot building and the $9 million worth of industrial machinery inside,” the Toronto police news release stated.

Toronto police also allege that the two men “altered attorney letters to reflect having legitimately bought the bakery.”

In an e-mailed statement, Easton disputed the allegation that it had not in fact closed the sale with Supreme Sweets and said it had purchased the property legitimately.

“Can you or anyone else possibly believe that individuals could walk into a business and take control and kick out an owner of any company without having a legitimate closed agreement with its attorneys?” the e-mail stated.

In an interview, Toronto Police spokesman Constable Victor Kwong said that investigators had evidence that, despite Easton having negotiated an agreement to pay the sellers, “there was never going to be a payment.”

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In October, Toronto police executed a search warrant at a business, Constable Kwong said.

He said Toronto police issued Tuesday’s release because investigators had developed reasonable grounds to believe that there may be more victims.

Both men are scheduled to appear in court in Toronto on Dec. 9.

In an e-mailed statement, Mr. Karras said that, despite having been arrested and charged criminally, he was “unaware as to the details of the allegations and the charges made.”

In his e-mail, he said the sellers of Supreme Sweets were in violation of certain conditions of the sale agreement and that when the dispute is investigated further, “the true victims will be revealed.”

A publicly listed phone number for Supreme Sweets was not in service Tuesday when a Globe and Mail reporter attempted to reach the company.

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The news of the criminal charges against the Easton executives also comes on the heels of the United States Securities and Exchange Commission having halted trading of Easton’s stock two weeks ago.

On November 19, the SEC suspended trading in Easton because of questions about the “accuracy and adequacy” about the recent public announcements concerning the acquisition of Supreme Sweets.

“The Commission is of the opinion that the public interest and the protection of investors require a suspension,” the SEC’s order states. The suspension is set to expire on Wednesday.

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