Dive Brief:
- The Securities and Exchange Commission is bringing fraud charges against a handful of individuals who allegedly participated in a $78 million pump-and-dump scheme involving stock for Jammin’ Java, which operates as Marley Coffee.
- Jammin' Java's former CEO Shane Whittle was allegedly the main orchestrator who utilized a reverse merger with a purported waste management company, Global Electronic Recovery Corp., to secretly gain control of millions of Jammin' Java shares and spread those shares across three offshore entities. After a fraudulent promotional campaign increased the price of the stock, the shares were then dumped, according to the SEC complaint.
- "The SEC is seeking injunctions, disgorgement, prejudgment interest, and penalties as well as penny stock bars against all of the individuals and an officer-and-director bar against Whittle," according to a news release.
Dive Insight:
The fraudulent promotional campaigns allegedly included a sham financing arrangement between Whittle and the offshore entities that was "designed to create the false appearance of legitimate third-party interest and investment in the company" and was announced in conjunction with coordinated trading by other connected parties. Brothers, Alexander and Thomas Hunter, allegedly created false stock newsletters, among other efforts, to hype the stock, which also increased its price.
"With Jammin’ Java’s stock value artificially inflated, the defendants and others coordinating with them dumped 45 million shares on the public market without registering the transactions, making at least $78 million in illicit profits in the process," according to a news release.
"As alleged in our complaint, the defendants made millions of dollars in illicit profits at the expense of the investing public and attempted to conceal their misconduct through complex offshore networks that were revealed in our investigation," said David Glockner, director of the SEC’s Chicago regional office, in a statement.