The SEC has filed fraud charges against alleged perpetrators of a $78 million pump & dump scheme involving shares of Marley Coffee. The company, Jammin Java, was marketed using the trademarks of reggae performer Bob Marley.
In a release by the SEC, officials stated that Jammin Java’s former CEO Shane Whittle secretly contrived to gain control of millions of shares in the coffee company using a reverse merger. Whittle, along with three accomplices, leveraged off-shore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and René Berlinger of Switzerland. Following a spike in the share price, the group dumped the shares on unsuspecting investors.
Charged with fraudulently promoting Jammin’ Java stock to investors are British twin brothers Alexander Hunter and Thomas Hunter, who were previously charged in a separate SEC case for touting multiple penny stocks using a fakestock picking robot. Others charged in the SEC’s complaint with facilitating the illegal offering through their offshore entities are UK citizens Stephen Wheatley and Kevin Miller and Oman resident Mohammed Al-Barwani. 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.
GOOD MORNING☀ Mornings are made for #MarleyCoffee☕? #StirItUp☕ pic.twitter.com/Tqfj1rMUtU
— Marley Coffee (@MarleyCoffee) November 17, 2015
According to the SEC, Whittle befriended the son of Bob Marley in Los Angeles. After learning of Marley’s purchase of a small Jamaican coffee farm, Whittle proposed the creation of a large-scale coffee distribution business built on the Marley name. Marley’s son was not implicated in the scheme to defraud.
To raise capital for the Marley venture, Whittle identified publicly-traded shell company Global Electronic Recovery Corp. (GERC), which was a purported waste management business in Los Angeles. He executed a reverse merger between GERC and Marley Coffee, which later became Jammin’ Java and trades under the ticker symbol JAMN. Whittle and others coordinated an illegal offering and the fraudulent promotion of Jammin’ Java’s stock in a pump-and-dump scheme that culminated in the middle of 2011. In anticipation of the promotion, Whittle distributed some of the nominee stock to offshore entities controlled by Weaver, Sun, and Berlinger. To boost the stock price and provide cash to Jammin’ Java, the group orchestrated a sham financing arrangement designed to create the false appearance of legitimate third-party interest and investment in the company.
“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.
Jammin’ Java’s announcement of the financing agreement and other company announcements – together with coordinated trading by entities connected to the scheme – caused the stock price to rise. To conceal his control of the stock and other aspects of the scheme, Whittle made material misstatements and misleading omissions in beneficial ownership reports filed with the SEC. The Hunters published false stock newsletters and took other steps to hype the stock and send the share price sharply upward. 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.
Jammin’ Java’s share price and volume began to collapse a few days after the company disclosed on May 9, 2011, that it became aware of an unauthorized and unaffiliated online stock promotion. The stock fell further after the company released disappointing financial results in its annual report.