SEC Sues Former Marley Coffee Exec In 78 Million Pump-And-Dump Stock Scheme

WASHINGTON -- The U.S. Securities and Exchange Commission this week filed charges against the former chief executive of Denver-based Marley Coffee and several of his associates, alleging he orchestrated a $78 million scheme to "pump and dump" company stock.

The SEC complaint alleges that Jammin Java Corp., d.b.a. Marley Coffee, its former chief executive Shane Whittle and his accomplices secured millions of shares in Jammin Java ahead of a reverse merger into a publicly traded shell company in the waste management business. Those shares were allegedly distributed in 2010 through a network of offshore entities controlled by other named defendants, according to the SEC complaint filed in U.S. District Court in the California Western Division.

By the middle of 2011, shares of Jammin Java hit a $6.35 per share high and record volume of 20 million shares, skyrocketing from the 17¢ a share and no volume in December 2010.

The complaint alleges that as the stock climbed, Whittle illegally distributed additional stock through the offshore network. The defendants eventually sold 45 million shares, generating $78 million before the stock lost most of its value, the SEC claims.

"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, head of the SEC's Chicago office.

Charged with fraudulently promoting Jammin' Java stock to investors are British twin brothers Alexander Hunter and Thomas Hunter, who were previously charged in a separate SEC "pump and dump" case.

Others charged in the SEC's complaint with facilitating the illegal offering through their offshore entities are UK citizens Stephen Wheatley and Kevin Miller and Oman resident Mohammed Al-Barwani. The SEC is seeking injunctions, disgorgement, prejudgment interest and penalties, as well as penny stock bars against all of the individuals and an officer-and-director bar against Whittle.

Whittle resigned from his executive posts in May 2010, and Jammin Java relocated its headquarters to Denver from Los Angeles in 2013.

The SEC has not brought any claims against Jammin Java's current management. It does charge in the complaint that the company wasn't vigilant enough when it authorized all of the transfers of stock to offshore entities and that the Jammin Java participated in registration violations because Whittle and his accomplices were engaged in an unregistered distribution of company shares.

Brent Toevs, current chief executive of Jammin Java, said he and company officials have worked closely with the SEC in its years-long investigation and that he is glad to see the complaint come to light.

"Now there's a chance shareholders can get some level of closure and hopefully recoup any of the losses they incurred from the alleged 'pump-and-dump,'" Toevs said. "We have shown that we are a legitimate company with a legitimate business and that we should not be held accountable for the misdeeds of our former management and their associates. We look forward to justice being served against Mr. Whittle and his associates in this matter, for our sake and the sake of our stockholders."