Former Marley Coffee CEO charged in alleged ‘pump-and-dump’ scheme
The former chief executive of a coffee company built on the name of late reggae star Bob Marley has been charged with running a “pump-and-dump” stock scheme that netted $78 million in illegal trading profits.
The Securities and Exchange Commission filed fraud charges Tuesday against Shane Whittle, the former CEO of Jammin’ Java Corp., a company Whittle cofounded with Rohan Marley, the late singer’s son, in Los Angeles.
Marley, who is still involved with the company, was not accused of wrongdoing.
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The SEC said Whittle, helped by eight outside accomplices, illegally profited by secretly taking control of millions of shares of Jammin’ Java, inflating their value and later dumping them on unsuspecting investors.
The scheme allegedly involved setting up a front company to make it appear that Jammin’ Java had a financial backer and making various promotional announcements that helped boost the share price.
The alleged accomplices -- none of whom are affiliated with the company -- are accused of various promotional activities, including publishing false stock reports and facilitating illegal stock transactions through offshore holding companies
The company was founded in 2008. The alleged illegal activity occurred in 2010 and 2011.
In May 2011, shares of Jammin’ Java, which also does business under the name Marley Coffee, surged to $6.35 -- a price that valued the company at more than $400 million, though its revenue the previous year was just $1,037, according to public filings.
Soon after reaching that peak, the defendents sold the shares, which later cratered to less than $1, according to the SEC. The dramatic rise and fall of the share price prompted the SEC’s investigation.
The company, which moved to Denver in 2013, continues to sell coffee under the Marley Coffee brand. It lost $10.3 million last year on $9.6 million in revenue, according to regulatory filings.
Shares were down 5 cents, or about 31%, to 12 cents in midday trading Tuesday.
Jammin Java President Anh Tran declined to comment, saying the company was preparing a response.
Whittle could not be reached for comment.
Twitter: @jkoren
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