The indictment states that Shumake was responsible for Minerco's daily activities and engaged in practices designed to artificially inflate the company’s stock price and demand by disseminating false and misleading information, particularly about Minerco's purported business in developing and distributing psilocybin mushrooms.
Source:FOX2
A federal grand jury in the District of Columbia has indicted a Michigan man for allegedly defrauding investors in Minerco Inc. (stock ticker: MINE), resulting in significant financial losses, as well as obstructing a Securities and Exchange Commission (SEC) investigation by destroying evidence.
Bobby Shumake Japhia, 56, who is also known by several aliases, including Robert Samuel Shumake Jr. and Shaman Bobby Shu, is accused of orchestrating a scheme to mislead investors regarding the publicly traded company's operations. The indictment states that Shumake was responsible for Minerco's daily activities and engaged in practices designed to artificially inflate the company’s stock price and demand by disseminating false and misleading information, particularly about Minerco's purported business in developing and distributing psilocybin mushrooms.
In the fall of 2019, Bobby Shumake, allegedly took covert control of a significant stock position in Minerco, a dormant penny stock company. He then orchestrated a plan for Julius Jenge to take over leadership of Minerco. Together, they began to inflate the company's stock price by marketing Minerco as the "first publicly traded company dedicated to the research, production, and distribution of psilocybin mushrooms." Psilocybin is the active psychoactive ingredient found in "magic mushrooms," a natural hallucinogen.
From 2020 to 2021, the defendants allegedly continued to pump Minerco stock by making public statements and disclosures that contained false and misleading information. For example, Shumake and Minerco allegedly issued press releases falsely suggesting that an independent third party had valued Minerco at $1 billion and that Minerco had partnered with a Jamaican company that would lend expertise in growing a unique strain of psilocybin and bequeath to Minerco its Jamaican cannabis licenses. The SEC’s complaint also alleges that Jenge and Minerco falsely claimed in public disclosures that Minerco was an active Nevada company when, in reality, its charter had been revoked. Finally, Shumake allegedly engaged an offshore company to “dump” his Minerco shares and ultimately transfer at least $3.4 million in ill-gotten gains to an entity Shumake controlled.
To disguise his involvement, Shumake allegedly appointed Julius Jenge as the nominal CEO, leveraging Jenge's position to obscure his own criminal history and negative media coverage. The indictment claims Shumake also misled Financial Industry Regulatory Authority (FINRA) investigators during their inquiries into Minerco.
Further, Shumake allegedly created a false persona on investor message boards to present himself as an independent investor rather than an insider. He is accused of selling nearly one billion shares of Minerco, reaping at least $2.5 million in the process, which contributed to inflated stock prices and led to substantial losses for investors.
As the SEC began investigating Minerco, Shumake purportedly obstructed the process by deleting critical emails associated with the company's operations.
Shumake faces one count of securities fraud and one count of obstruction, with each charge carrying a maximum penalty of 20 years in prison upon conviction. Earlier this year, Julius Jenge, Minerco's CEO, was arrested on related securities fraud charges.
“As alleged here, pump-and-dumps often begin when cheap stock of dormant companies is suddenly touted by a promoter as the next big thing,” said Melissa Hodgman, Associate Director of the Division of Enforcement.
A little background into Bobby Shumake Japhia, according to FOX2, in 2010, an investigation began into a company called Mortgage Auditors of America. Victims complained they had paid the company to help them save their homes from foreclosure. They paid thousands for forensic mortgage audits and then the company disappeared with their money.
It was discovered the man behind the business was Robert Shumake, a prominent Detroit businessman.
In 2018, Shumake pleaded guilty to two misdemeanor violations of the credit services protection act while his business, Mortgage Auditors of America pleaded guilty to two felony counts of obtaining money by false pretenses and 13 misdemeanors. Shumake at the time claimed to just be a "promoter" of the business, whereas it was Shumake himself who entered the guilty pleas as a representative for the company.
"You are a criminal. You have plead guilty to crimes and now you are a criminal. You preyed on people at their lowest possible moment," Judge James Alexander said. "You got all these people that will stand up and say you're a wonderful guy and humanitarian. And you preyed on people when they were losing their homes."
Robert Shumake eventually headed the 'Soul Tribes International Ministries', a “psychedelic church” based in Detroit, according to Detroit Metro. The church challenged a city-initiated shutdown of its operations in federal court. The church, located inside Bushnell Congregational Church, was raided by the Detroit Police Department on September 22, leading to a temporary restraining order that padlocked the facility and barred its owner, Shaman Shu (CEO of Tribal Souls), from access.
Shu, also known as Robert Shumake working to Bobby Japhia, claimed the city’s actions violate the Religious Freedom Restoration Act. On December 4, the City of Detroit requested the case be moved back to Wayne County Circuit Court, arguing that the issues at hand do not involve federal matters.
"These sacraments reflect our deeply held religious beliefs and form an integral part of our worship and religious practices, as supported by the Religious Freedom Restoration Act of 1993," reads the Soul Tribes website. "Our mission is to support the religious freedom and practices of those who believe in the therapeutic power of these plants."
In a statement from Doug Baker, Detroit’s Assistant Corporation Counsel, it said: “The Detroit Police Department worked closely with City Council President Pro-Tem James Tate, the city’s law department, and building safety, engineering, and environmental department in preparing this enforcement action. Despite its intent, the city ordinance does not override state law, which considers psilocybin to be a controlled substance. The ordinance also does not allow for the sale or distribution of psilocybin.”
Soul Tribes views psilocybin mushrooms as a sacred sacrament and had been selling them from its church grounds. Following a Metro Times article highlighting the church, police seized over 99 pounds of mushrooms, and more than 120 pounds of materials suspected to be marijuana. The city’s original complaint described the property as misrepresenting itself as a church while functioning as a distribution center for illegal substances.
In addition to contesting the city’s actions, Shu and Lake pursued a $1 billion countersuit against Detroit, alleging racial and religious discrimination, and claiming damages of $500,000 from vandalism and theft while the church was closed.
On September 22, 2023, the Detroit Police halted the church's activities, pointing to the state's prohibition on psychedelic substances. While Proposal E was approved by Detroit voters in 2021, which decriminalized psychedelics, the state law continues to classify the sale and distribution of these drugs as illegal, according to Doug Baker, Assistant Corporation Counsel for Detroit.
"As a result of the operation, which involved DPD personnel, BSEED (Buildings, Safety Engineering, and Environmental Department) inspectors, and the work of our city attorneys, illegal controlled substances have been confiscated, and an illegal operation that posed a threat to this community has been closed,” police said in a prepared statement.
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