Cana­dian lands hefty fine for cof­fee pump-and-dump

SEC de­fen­dant Weaver or­dered to pay $57.9M (U.S.)

Stockwatch Daily - - FRONT PAGE - By Mike Caswell

THE U.S. Se­cu­ri­ties and Ex­change Com­mis­sion has won $57.9-mil­lion in penal­ties against Wayne Weaver, one of the Cana­di­ans ac­cused of par­tic­i­pat­ing in the Jam­min’ Java Corp. pump-and-dump. (All fig­ures are in U.S. dol­lars.) A Cal­i­for­nia judge has de­ter­mined that the sanc­tion is nec­es­sary, given that the fraud was long-run­ning and so­phis­ti­cated. The Jam­min’ Java scheme re­sulted in $26.3-mil­lion in gains for Mr. Weaver, the judge has ruled.

The sanc­tions are con­tained in an or­der handed down on Thurs­day, Sept. 14, by U.S. Dis­trict Court Judge Stephen Wil­son. Mr. Weaver’s penalty in­cludes dis­gorge­ment of

$26.3-mil­lion in gains plus in­ter­est, as well as a $26.3-mil­lion fine. In ad­di­tion, the judge has per­ma­nently barred Mr. Weaver from penny stocks.

The penal­ties stem from the 2011 pump-and-dump of Jam­min’ Java, a pur­ported cof­fee com­pany. The SEC said that a group of men boosted the stock with mis­lead­ing claims about a business that in­cluded the name of the late singer Bob Mar­ley. Dur­ing the scheme, off­shore ac­counts con­nected to Mr. Weaver were heavy sell­ers, the SEC claimed.

The $57.9-mil­lion de­ci­sion is a hefty set­back for Mr. Weaver, who had claimed that his prof­its from the scheme were nowhere near as high as the SEC set them out to be. For in­stance, the SEC claimed that Mr. Weaver should be li­able for $11.3-mil­lion in pro­ceeds from share sales that went to a Turk­ish bank ac­count. Mr. Weaver con­tended that there was noth­ing to show that he ever saw that money. In fact, the tes­ti­mony of one of his co-de­fen­dants placed it in the hands of some­body only named “Kevin,” he said. Sim­i­larly, the tes­ti­mony of an­other co-de­fen­dant showed that Mr. Weaver did not con­trol $7.79-mil­lion that was in bank and bro­ker­age ac­counts in the names of oth­ers, he said.

The judge, how­ever, found that it was clear Mr. Weaver made $26.3-mil­lion from the scheme. Mr. Weaver also par­tic­i­pated in a de­cep­tion that the judge de­scribed as ex­traor­di­nar­ily so­phis­ti­cated. The judge fur­ther said that a civil penalty of $26.3-mil­lion (equal to Mr. Weaver’s gains) was war­ranted, given the fact that he par­tic­i­pated in such a long-run­ning ma­nip­u­la­tion.

The de­ci­sion to add the civil penalty was an im­por­tant one when it came to the to­tal dol­lar fig­ure, as it nearly dou­bled Mr. Weaver’s sanc­tion. The judge im­posed the penalty de­spite Mr. Weaver’s con­tention that dis gorg­ing his gain s amounted to an ef­fec­tive penalty on its own. The judge, how­ever, found this po­si­tion to have no merit. “De­fen­dant Weaver seems to be­lieve that vi­o­lat­ing fed­eral se­cu­ri­ties laws should carry no con­se­quences,” the de­ci­sion states.

In ad­di­tion to the dis­gorge­ment, civil penalty and ban, the judge im­posed an or­der bar­ring fu­ture vi­o­la­tions. The judge gave Mr. Weaver 14 days to pay the $57.9-mil­lion (which he may do on-line through the web­site, should he de­cide to pay).

The sanc­tion for Mr. Weaver is by far the high­est in the case. The other Cana­dian de­fen­dant, Kelowna’s Shane Whit­tle, set­tled the mat­ter out of court. With­out ad­mit­ting any wrong­do­ing, he agreed to pay $2.41-mil­lion. Most other de­fen­dants re­ceived even smaller sanc­tions.

For Mr. Weaver, his trou­bles with the SEC go back to Nov. 17, 2015, when the reg­u­la­tor filed a civil com­plaint against him, Mr. Whit­tle and oth­ers for the Jam­min’ Java scheme. The com­plaint iden­ti­fied Mr. Weaver, 48, as a Cana­dian re­sid­ing in Ne­vis or in the Baili­wick of Jersey. The SEC said that he was part of a com­plex net­work of off­shore en­ti­ties through which Mr. Whit­tle sold Jam­min’ Java shares. This sell­ing took place while oth­ers pre­dicted the stock would hit $10, the SEC claimed.

The scheme, as de­scribed by the SEC, came about af­ter Mr. Whit­tle met Bob Mar­ley’s son, a for­mer Cana­dian Foot­ball League player named Ro­han Mar­ley (who is not a de­fen­dant). Ac­cord­ing to the com­plaint, Mr. Whit­tle formed Jam­min’ Java and pro­moted the com­pany as hav­ing the li­cence to sell cof­fee prod­ucts un­der Bob Mar­ley’s name. The SEC said that Mr. Whit­tle was the CEO and later a de facto of­fi­cer while the com­pany is­sued a string of false and mis­lead­ing news re­leases about its cof­fee prod­ucts. (He re­signed as CEO af­ter a pair of ar­ti­cles in the Van­cou­ver Sun by David Baines in May, 2010. The ar­ti­cles linked him with var­i­ous penny stocks in Mr. Baines’s usual un­flat­ter­ing style.)

As a re­sult of the ef­forts of Mr. Whit­tle and oth­ers, the stock reached a $6.35 high on May 12, 2011, the com­plaint stated. It did so de­spite reg­u­la­tory fil­ings that showed it had lit­tle in the way of real prospects, the SEC said. Those fil­ings stated that the com­pany had no sales, no em­ploy­ees and only nom­i­nal op­er­a­tions. Once the pro­mo­tion ended, the stock quickly fell, go­ing be low 50 cents just weeks af­ter that high. (It was last at 0.035 cent.)

The other de­fen­dants in the case were: Stephen Wheat­ley, 52, of Lon­don, U.K.; Kevin Miller, of Jersey; and Mo­hammed Al-Bar­wani, 72, of Oman. Also de­fen­dants were Van­cou­ver-linked U.K. twins Alexan­der and Thomas Hunter. Be­sides Mr. Weaver, all of the de­fen­dants set­tled the case out of court, with­out ad­mit­ting any wrong­do­ing.



Shane Whit­tle and Ro­han Mar­ley

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