Defendants falsely promoted Minerco as the “first publicly traded company focused on the research, production, and distribution of psilocybin mushrooms.”
Source: Securities and Exchange Commission news release
The Securities and Exchange Commission said Oct. 9 it charged Minerco Inc., Bobby Shumake Japhia,and Julius Makiri Jenge, for their roles in an alleged pump-and-dump scheme that defrauded investors out of approximately $8 million while generating millions of dollars in ill-gotten proceeds from sales of Minerco stock.
According to the SEC’s complaint, in the fall of 2019, Shumake, who was formerly known as Robert Samuel Shumake, Jr., secretly gained control of a large stock position in Minerco, an inactive penny stock company, and then arranged for Jenge to assume control of Minerco.
The defendants then began pumping Minerco’s stock price by promoting Minerco as the “first publicly traded company focused on the research, production, and distribution of psilocybin mushrooms.”
From 2020 to 2021, the defendants allegedly continued to pump Minerco stock by making public statements and disclosures that contained false and misleading information. For example, Shumake and Minerco allegedly issued press releases falsely suggesting that an independent third party had valued Minerco at $1 billion and that Minerco had partnered with a Jamaican company that would lend expertise in growing a unique strain of psilocybin and bequeath to Minerco its Jamaican cannabis licenses.
The SEC’s complaint also alleges that Jenge and Minerco falsely claimed in public disclosures that Minerco was an active Nevada company when, in reality, its charter had been revoked. Finally, Shumake allegedly engaged an offshore company to “dump” his Minerco shares and ultimately transfer at least $3.4 million in ill-gotten gains to an entity Shumake controlled.
“As alleged here, pump-and-dumps often begin when cheap stock of dormant companies is suddenly touted by a promoter as the next big thing,” said Melissa Hodgman, associate director of the SEC’s Division of Enforcement. “Today’s action serves as an important reminder that the SEC will remain steadfast in its efforts to root out of the market stock offerings that are more about hype than substance.”
The SEC previously obtained an order compelling Jenge to produce documents and appear for testimony pursuant to an investigative subpoena issued by the SEC.
The SEC’s complaint, filed in the United States District Court for the District of Columbia, charges Minerco, Shumake, and Jenge with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks permanent injunctions, disgorgement with prejudgment interest, and civil monetary penalties against each defendant, as well as conduct-based injunctions and penny stock and officer-and-director bars against Shumake and Jenge.