A federal grand jury in the District of Columbia indicted a Michigan man with defrauding investors in Minerco Inc. (stock ticker MINE), federal officials stated Wednesday
Authorities say the alleged fraud led to millions of dollars in investor losses, and the defendant allegedly destroyed evidence to obstruct a Securities and Exchange Commission (SEC) proceeding.
The indictment alleges that Bobby Shumake Japhia, 56, also known as Robert Samuel Shumake Jr., Robert Japhia, and Shaman Bobby Shu, of Michigan, managed Minerco’s daily operations and orchestrated a scheme to defraud investors in the company’s publicly traded securities.
He allegedly did this by making or causing others to make false and misleading statements, including in press releases, to artificially boost the share price and demand for Minerco stock.
Starting around January 2020, Minerco claimed to be involved in developing, marketing, and distributing psilocybin (magic or psychedelic) mushrooms.
The indictment claims that Shumake hid his control over Minerco by appointing Julius Jenge as the nominal CEO, since Shumake’s criminal history and negative online articles about him could have raised concerns.
Shumake allegedly made false and misleading statements to investigators from the Financial Industry Regulatory Authority during their investigation of Minerco to further conceal the scheme.
Shumake is also accused of using an alias to promote Minerco on an investor message board, falsely presenting himself as an independent investor with no ties to the company.
He allegedly recruited others to promote Minerco online, creating a misleading impression of widespread public support for the company.
Shumake allegedly sold nearly one billion shares of Minerco that he secretly acquired, pocketing at least $2.5 million through entities he controlled. His scheme artificially inflates the share price and demand for Minerco’s stock, leading to millions of dollars in investor losses.
After becoming aware of an SEC investigation, Shumake allegedly obstructed the proceedings by deleting the contents of at least one email account used for Minerco business.
Shumake is charged with one count of securities fraud and one count of obstruction. He faces up to 20 years in prison on each count if convicted. He is presumed innocent unless proven guilty.
Julius Jenge, Minerco’s chief executive officer, was arrested earlier this year on charges of securities fraud related to a scheme to defraud investors in Minerco.
The SEC Office of Inspector General and USPIS are investigating the case.
Trial Attorney Kyle Crawford of the Criminal Division’s Fraud Section is prosecuting the case.