Was Robert Shumake a shaman or a securities fraudster? Or Both?
On one hand he was the shaman of Soul Tribes in Detroit that was trying to “safe and sacred space for individuals to explore the healing benefits of sacred plants.” That apparently included storing over 99 pounds of mushrooms believed to be psilocybin and over 120 pounds of “material believed to be marijuana” from the church. Shumake claimed he was protected under the Religious Freedom Restoration Act. Detroit claimed it was a distribution center for unlawful controlled substances, poorly masquerading as a church. (Soul Tribes was apparently not a licensed marijuana dispensary.)
On the federal side, the Securities and Exchange Commission and the Department of Justice claim that Shumake was running a securities fraud on Minerco. The company claimed to be “first publicly traded company focused on the research, production and distribution of psilocybin mushrooms.”
Minerco was largely defunct company in 2019. According to the SEC complaint, Mineco got his hands on old debt owed by the company that was convertible into Minerco stock. That conversion of stock gave Shumake and his co-conspirator control of the company, gave control of the company to them and the power to issue more shares.
Then they had Minerco issue a bunch of press releases and advertising to pump up the value of the company. The company claimed that it had been reviewed by a third-party and was worth $1 billion.
At the start of the scheme, Minerco’s stock closed at $ 0.000001. Four months later Minerco’s stock closed at $0.0127, a 1,269,900% increase. Trading volume likewise skyrocketed from approximately 22 million shares to nearly 3 billion shares.
During the Relevant Period, Defendants’ pump-and-dump scheme inflicted pecuniary harm on investors who traded Minerco shares. Investors who bought Minerco stock in reliance on the public announcements that were either misleading or false, or that created a false appearance of fact, were duped. They paid a higher price than the shares were worth, and they suffered losses when they tried to sell their shares. Moreover, Minerco’s issuance of one billion additional shares diluted existing stockholders’ equity.
During this time, Shumake and his co-conspirator sold the stock they had acquired for at least $7 million.
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