Minerco CEO Julius Jenge was arrested last week for alleged securities fraud.
According to the Justice Department, from about October 2019 to June 2021, the 54-year-old Jenge allegedly defrauded investors by working with an unnamed co-schemer to seize control of the company in late 2019. As part of the takeover, Jenge had one billion Minerco shares issued to a nominee shareholder who he believed to be his co-schemer's then-girlfriend. He also put out press releases that contained materially false and misleading information about the company in an effort to artificially increase the share price.
According to the criminal complaint, the company traded under the stock symbol "MINE" in the Over-the-Counter Markets (OTC Markets) rather than on a national securities exchange, like the NASDAQ stock market. Stocks, commonly referred to as "penny stocks," are often traded in OTC markets.
Around January 2020, Minerco allegedly said it was developing, marketing, and distributing psilocybin mushrooms, also known as psychedelic mushrooms.
According to the DOJ, Jenge's co-schemer had a criminal history and controlled all aspects of Minerco's operations. The CEO concealed the third party's involvement, specifically in public filings. During an investor video conference, Jenge also said he had earned an MBA in marketing and a B.A. in accounting.
According to the criminal complaint, the co-schemer lived in Michigan and controlled all aspects of Minerco beginning in or around October 2019. For example, he made corporate strategy decisions on behalf of the company, negotiated with third parties, paid or directed others to pay monies on behalf of Minerco, and directed others to draft press releases. Jenge was a subordinate of the unnamed boss, and the pair have reportedly known each other for more than ten years.
In December 2017, the third-party pleaded guilty to two misdemeanor criminal violations of the Michigan Credit Service Protection Act and was sentenced to 18 months of probation in connection with a mortgage fraud scheme.
Throughout the scheme, Minerco's stock price and trading volume increased as investors purchased stock.
Jenge was arrested last Thursday at Ronald Reagan Washington National Airport. He was booked on a flight to Tanzania. Jenge was born and raised in Tanzania and is a naturalized U.S. citizen.
Jenge is charged with one count of securities fraud. If convicted, he faces up to 20 years in prison.
Based in Nevada, Minerco was founded around 2007. The SEC suspended trading of Minerco stock in May 2021.
