Litigation Releases (Minerco, Inc., Bobby Shumake Japhia, and Julius Makiri Jenge)

Minerco, Inc., Bobby Shumake Japhia, and Julius Makiri Jenge

U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26150 / October 9, 2024

Securities and Exchange Commission v. Minerco, Inc., Bobby Shumake Japhia, and Julius Makiri Jenge

, No. 1:24-cv-02870 (D.D.C. filed Oct. 9, 2024)

SEC Charges "Magic Mushroom" Company and Two Individuals with Multimillion Dollar Pump-and-Dump Scheme

The Securities and Exchange Commission today charged Minerco Inc. (former over-the-counter ticker: MINE), 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."Psilocybinis the principal psychoactive component in "magic mushrooms," a plant-based hallucinogen.

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falsely claimed in public disclosures that Minerco was an active Nevada company when, in reality, its charter had been revoked.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.

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.

The SEC's investigation, which is ongoing, is being conducted by Adam Eisner, Brittany Garmyn, Keith O'Donnell, and Zachary Scrima and supervised by C. Joshua Felker and Ms. Hodgman. Damon Taaffe will lead the litigation team under the supervision of David Nasse. The SEC appreciates the assistance of FINRA, OTC Markets Group, the Securities Commission of The Bahamas, the Jamaica Financial Services Commission, the Québec Autorité des Marchés Financiers, the Capital Markets Board of Türkiye, and the Belize Financial Services Commission.

The SEC encourages investors to takecertain steps to identifypump-and-dump schemesinvolving the stocks of dormant shell companies.

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