Marley Coffee nears settlement with SEC in pump-and-dump probe
Published:Thursday | May 12, 2016 | 12:00 AMSteven Jackson
Jammin Java Inc, which trades as Marley Coffee, indicated that it reached a possible settlement with the United States Securities and Exchange Commission (SEC) over a fraud investigation mainly involving former Chief Executive Shane Whittle.
Whittle is accused of a pump-and-dump scheme involving the Jammin Java stock. A serious fine by the regulator would roll back some of the gains made by the US-based coffee trader, whose losses were halved in the past year.
"The company has reached a settlement in principle with the commission to settle the claims made by the commission, which has not yet been formally approved or accepted by the commission to date, and may not be approved or accepted," said Marley Coffee in its market filing this week to shareholders.
Marley Coffee annual sales amounted to US$12.3 million, up from US$9.3 million a year earlier. Its net losses totalled US$5.2 million compared to US$10.2 million the year before.
Its filing also laid out a worst-case scenario in the settlement with the SEC.
"In the event the company were to have to pay significant fines or disgorgement in the matter described above, and the company was unable to raise sufficient funding to pay such fines or disgorgement, the company could be forced to suspend its activities, terminate its operations or seek bankruptcy protection," stated Jammin Java.
Last November 17, the SEC announced "fraud charges against several alleged perpetrators behind a US$78-million pump-and-dump scheme involving the stock of Jammin Java".
The regulator alleges that Whittle orchestrated the scheme with three others who live abroad and operate entities offshore.
"Whittle utilised a reverse merger to secretly gain control of millions of Jammin Java shares, and he spread the stock to the offshore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and Rene Berlinger of Switzerland. The shares were later dumped on the unsuspecting public after the stock price soared following fraudulent promotional campaigns," stated the SEC document at the time.
The SEC also laid charges against British twin brothers Alexander Hunter and Thomas Hunter, allegedly for fraudulently promoting Jammin Java stock to investors.
The American regulator said the twins were previously charged in a separate SEC case for touting multiple penny stocks using a fake stock-picking robot.
Others charged in the SEC's Jammin Java complaint for facilitating the illegal offering through their offshore entities are UK citizens Stephen Wheatley and Kevin Miller, and Oman resident Mohammed Al-Barwani.
"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, back in November.