Lawsuit: Former DNC and Minn. political operative defrauded South Dakota cannabis companies

A former Minnesota political operative who worked for the Democratic National Committee is accused of defrauding two South Dakota medical cannabis companies and their investors of nearly $1.7 million.

Dakota Natural Growers, 605 Cannabis and about two dozen of their investors filed a lawsuit in Hennepin County in December against Will Hailer, eSt Ventures LLC, Badlands Fund GP LLC and Badlands Ventures LLC. The lawsuit claims that Hailer and the three funds Hailer manages solicited a total of $3.5 million in investments with the "intention of stealing and/or misappropriating most of the money."

"We're disappointed that this money was stolen from us," attorney Jason Tarasek said on behalf of the plaintiffs he's representing. "These are new entrepreneurs excited about a new opportunity to bring medicine to people in South Dakota, and [they] put their trust in someone who wasn't worthy of it."

Hailer, who no longer lives in Minnesota, worked in politics for years and spent time at the Democratic National Committee as senior adviser. He was a campaign manager for current Minnesota Attorney General Keith Ellison during some of the Democrat's time in Congress and also worked as part of Ellison's official U.S. House operations in the role of district director, according to a LinkedIn profile.

Democratic U.S. Rep. Ilhan Omar's husband, Tim Mynett, is mentioned in the lawsuit but is not listed as a defendant in the case. The lawsuit alleges that Hailer and Mynett co-founded eSt Ventures and formed the Badlands Fund GP to control another investment fund, Badlands Ventures.

A spokesman for Omar said in an email that "Rep. Omar or her family have no involvement in this lawsuit whatsoever." Mynett did not respond to a request for comment.

Reached by email Wednesday, Hailer also said Mynett "had no involvement in the deal."

"We hope to resolve all claims amicably and are working towards an out of court resolution for all parties," Hailer said.

According to the lawsuit, Dakota Natural Growers and 605 Cannabis were seeking money from relatives and acquaintances to grow their businesses. They assembled a number of investors who were ready to invest $3.5 million split between the two companies.

The lawsuit states Hailer approached the owners and operators of the cannabis companies in early 2022 proposing he could raise millions of dollars on their behalf if they let him control the capital raise through his firm, eSt Ventures. Hailer allegedly promised the investors he could raise $10 million to invest equally in Dakota Natural Growers and 605 Cannabis if they entrusted him with their initial $3.5 million.

The investors obliged, investing their $3.5 million into the Badlands Ventures fund, according to the lawsuit.

Over the subsequent months, the lawsuit states that Hailer repeatedly assured the companies and their investors that he was about to land new investments. But to their knowledge, "the defendants never secured any other investor, for any amount," the suit states.

Hailer and Badlands GP eventually returned $1.8 million to the investors, the lawsuit said, but they've never given back the rest of the money.

On behalf of his clients, Tarasek requested to inspect Badlands Ventures' books and records in November to see if the money was still there, the lawsuit states, but that request was refused.

The parties reached a settlement agreement late last year that would have had Badlands Ventures pay about $1 million to Dakota Natural Growers and nearly $600,000 to 605 Cannabis. A document filed in court shows the agreement was signed by Hailer.

But the money was never sent, according to the lawsuit seeking the return of $1.68 million plus attorneys' fees and unspecified "punitive damages."

An attorney for Hailer did not respond to requests for comment but has filed to dismiss the case. A hearing is scheduled for April.

Hailer earlier co-founded the political consulting firm E Street Group with Mynett. The firm went on to receive large amounts of money from Omar's political campaign after payments started in 2018, according to campaign finance records. In March 2020, Omar announced her marriage to Mynett, and later that year her campaign severed financial ties with E Street Group amid scrutiny. Omar has denied any impropriety but had said she wanted to avoid a perception of conflict.

An online bio for Hailer said that "he has worked on campaigns" for major Democrats, including Omar and former Minnesota U.S. Sen. Al Franken.

Hailer had a stint as executive director at the Texas Democratic Party and was part of Ellison's unsuccessful run to lead the DNC after the 2016 presidential election, according to a LinkedIn bio. Ellison was deputy chairman of the DNC at the same time Hailer worked as senior adviser at the national party.

Staff researcher John Wareham contributed to this report.