Lender Says $1.6 Million Loan Became 'Personal Piggybank' for Owners of Cannabis Dispensary Backed by Ice-T

A cannabis venture backed by Ice-T and big ambitions in New Jersey has unraveled into a federal fraud lawsuit, with a lender alleging that money meant to build and open a Jersey City dispensary was diverted almost immediately to pay personal debts, cover luxury credit card expenses and prop up a separate California business.

In a complaint filed in federal court in California, AuxoCap JC LLC accuses Charis Burrett, Luke Burrett and The Medicine Woman Group of orchestrating what it describes as a deliberate scheme to misuse a $1.6 million secured working-capital loan. The money, according to the suit, was supposed to be used exclusively for the construction, furnishing and opening of The Medicine Women’s Jersey City dispensary. Instead, the lender alleges, the funds were raided within 24 hours of closing and the business that secured the loan eventually collapsed.

The case is framed not as a routine business failure, but as a lender-fraud action. AuxoCap says it extended the financing in August 2024 on the understanding that the proceeds would be used only for the New Jersey dispensary and not for personal expenses or unrelated ventures. In exchange, the lender says it received a first-priority security interest in all borrower assets and a 20% membership interest in the operating entity.

According to the complaint, the misconduct began almost immediately after the loan wasfunded on Aug. 12, 2024. The next day, AuxoCap alleges, $500,000 was transferred out to repay a personal loan owed by Luke Burrett. The complaint says the transaction was falsely recorded in the company’s general ledger as “Property $500k being returned to Burretts,” even though there had been no corresponding contribution from the Burretts. The lender says the couple later admitted both the transfer and the false bookkeeping entry during its investigation.

From there, the complaint alleges, the diversion widened. AuxoCap claims loan proceeds and company funds were used to pay more than $150,000 in personal American Express charges between October 2024 and June 2025. It also alleges that money was funneled to support a separate Bellflower, Calif., dispensary owned by The Medicine Woman Group, including nearly $124,000 in direct transfers and more than $68,000 used to repay a separate loan tied to that operation.

At the same time, the lawsuit says, vendors connected to the Jersey City business were left hanging, with roughly $500,000 in outstanding liabilities. AuxoCap alleges point-of-sale data was manipulated to make it appear vendors had been paid when they had not, further masking what the lender describes as a systematic erosion of the collateral backing the loan.

The Jersey City dispensary, once the stated reason for the financing, is now permanently closed, according to the complaint. AuxoCap says that closure destroyed the going-concern value of the business and sharply reduced its chances of recovering what it is owed.

The lawsuit also says the borrower defaulted on an interest payment due in October 2025. AuxoCap issued a formal notice of default and acceleration on Nov. 13, 2025, demanding repayment and instructing the borrower to stop disposing of assets, taking on new obligations or making unusual transactions without consent. According to the complaint, the defendants ignored that notice, continued dissipating assets and later caused the borrower to file a deed of assignment for the benefit of creditors without AuxoCap’s consent — a move the lender says improperly blocked its ability to enforce its rights as a secured creditor.

AuxoCap is seeking sweeping relief, including an injunction freezing and tracing assets, appointment of a receiver or special master, a constructive trust and equitable lien over property traceable to the loan, compensatory and punitive damages, and restitution and disgorgement.

The allegations place an especially harsh spotlight on Charis Burrett, a former Playmate with ties to a prominent real estate family, and on the celebrity-adjacent aura surrounding the business. Ice-T is an investor in the company, adding a high-profile name to a case that might otherwise read like a niche lending dispute in the cannabis sector.

But the complaint’s language is broader and more blistering than that of a typical commercial dispute.

AuxoCap alleges the Burretts treated the loan as a “personal piggybank,” using the company to enrich themselves and support another business while leaving the New Jersey operation starved of resources. The suit also points to what it describes as a prior pattern of similar conduct, citing an earlier California state court case in which investors allegedly accused the couple of charging personal and unrelated expenses to a company.