(Bloomberg) -- Federal prosecutors accused a Michigan man of defrauding investors out of millions of dollars by drumming up fake news about a magic mushroom business and destroying evidence when regulators started asking questions.
Bobby Shumake Japhia, also known as Robert Samuel Shumake Jr., was indicted Wednesday in Washington on securities fraud and obstruction charges. He faces up to 20 years in prison on each count if convicted, according to the US Department of Justice.
Shumake was the “mastermind” behind Minerco Inc., a company that purported to market and distribute psilocybin mushrooms, also known as psychedelic mushrooms. Shumake hid his involvement in the company because of his criminal history and recruited someone else to serve as CEO, prosecutors alleged.
In August, federal authorities arrested Minerco Chief Executive Officer Julius Jenge at Ronald Reagan Washington National Airport, where he was booked on a flight to Tanzania. He was charged with one count of securities fraud, the DOJ said.
The Securities and Exchange Commission on Wednesday separately accused Shumake, Jenge and the company — which previously traded on the pink sheets — of fraud. The regulator said the pair defrauded investors out of $8 million by promoting Minerco as the first publicly traded company focused on magic mushrooms.
From 2020 to 2021, the company rolled out press releases announcing rapper endorsements, plans for a research relationship with the University of Michigan, and a third-party valuing the company at $1 billion. None of this was true, according to the SEC’s complaint. Shumake also anonymously posted on investor message boards under the name “Burntcheeze” to tout the company’s stock.
Minerco didn’t immediately reply to a message seeking comment. The SEC said there was no known legal counsel for the company at the time of the filing.
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