Need assistance getting a cannabis business license? Schedule a Free Consultation
The U.S. Department of Justice announced that the chief executive officer of psilocybin company Minerco Inc. (OTC: MINE), Julius Jenge was arrested on Aug. 22 at Ronald Reagan Washington National Airport, where he was booked on a one-way flight to Tanzania.
The former CEO was fleeing a Securities and Exchange Commission (SEC) investigation into the stock fraud allegations around the penny stock company Minerco.
Minerco origin
Minerco initially started as an oil company that pivoted to renewable energy and then beverages. It wasn’t until 2019 that Jenge got involved when asked by an unnamed collaborator to lead the company after it was bought from the previous owners. The collaborator had a criminal record and couldn’t lead the company and asked Jenge to do so, although the collaborator was really the person calling the shots.
In 2020, the company began allegedly making false statements, saying a psilocybin research and investment firm acquired Minerco. In 2021, the company began touting its psilocybin business and Minerco announced a joint venture with Lazurus Holistic to serve as psilocybin experts to grow and develop a unique strain of mushrooms specific to Jamaica. Through the venture with Lazurus, Minerco said it would inherit multiple cannabis licenses to grow, process, and extract cannabis, as well as psilocybin.
Minerco told investors it would purchase manufacturing equipment to produce up to one million tablets of psilocybin microdots daily that would be sold in legal markets, plus a line of medical-graded mushrooms sold nationwide. The company also said it had exported mushrooms to Mydecine (OTC: MYCOF), which Mydecine denied.
Then the collaborator began selling shares after the share price increased and the trading volumes grew based on the false statements.
The DOJ complaint stated that when interviewed, Jenge claimed he was becoming concerned about the legitimacy of Minerco, but continued to serve as the company’s CEO. The complaint also states that Jenge agreed to conceal the involvement of the collaborator from investors. Jenge also told investors he had various educational degrees he didn’t complete.
The complaint also states that the collaborator legally changed his name in May 2023.
SEC trouble
It didn’t take long for the company to implode. In May 2021, the SEC ordered a suspension of trading when the company failed to produce financial statements. The SEC then issued an administrative subpoena to Jenge in or around October 2021 in connection with its investigation into Minerco, and Jenge did not comply.
It wasn’t until March 2024 that agents from the SEC OIG and U.S. Postal Inspection Service interviewed Jenge, after he arrived on a flight from Tanzania at Washington Dulles Airport, and told him they were investigating Minerco. Jenge claimed he didn’t know about his collaborator’s criminal past and thought the company press releases were factual. He also claimed he received no money from Minerco, which agents said was false.
In July 2024, Jenge decided to fight back and filed a lawsuit against the SEC. The complaint alleged that, among other things, the SEC unlawfully suspended trading in Minerco and “inflicted substantial and irreparable harm on the financial stability, market position, and reputation of Minerco, Inc., as well as the professional standing of its Chief Executive Officer.”
The complaint Jenge filed further claimed that “all press releases issued by Minerco were factual, timely, and in compliance with applicable securities laws.”
On Aug. 12, Judge Tanya S. Chutkan of the U.S. District Court for the District of Columbia ordered Jenge “to produce documents responsive to the SEC subpoena” by Aug. 23, and “appear for testimony at the Commission’s Offices.”
That’s when Jenge decided to skip town.
