Canadian lands hefty fine for coffee pump-and-dump
SEC defendant Weaver ordered to pay $57.9M (U.S.)
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 pay.gov 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