Former Ebony CEO reportedly pocketed money raised for marijuana companies to keep magazine afloat: SEC
The former director of Ebony magazine, who was ousted last year amid allegations of financial irregularities, is among a group of people accused by the SEC of raising money for marijuana companies, but for illegally using the money for other things, including keeping the magazine afloat.
Willard Jackson, 57, is accused of participating in a nearly $ 2 million crowdfunding scheme for a series of real estate businesses linked to marijuana, but whose directors kept the money to themselves , according to civil charges brought by the Securities and Exchange Commission.
An attorney for Jackson did not immediately comment.
At the center of the alleged business was Robert Shumake, 53, who the SEC said withheld his name from investors due to criminal convictions for fraud in the past, but actually devised the scheme and allegedly helped to hijack money from his goals. .
Messages left with Shumake’s lawyers were not immediately returned.
Jackson was forced to step down as head of Ebony in July 2020, after the company’s lenders worried about Shumake’s sudden appearance as an investor and allegations of secret links between the magazine and marijuana companies.
Ebony was eventually forced into bankruptcy and sold to former NBA Junior star Bridgeman for $ 14 million. The media business was relaunched this year with Bridgeman’s daughter Eden Bridgeman Sklenar at the helm.
An Ebony rep did not immediately return a message requesting comment.
Founded in 1945 by Chicago businessman John H. Johnson, Ebony sold nearly 2.5 million copies per month during its heyday in the 1980s, focusing on empowerment stories. and Success Black, featuring personalities from Sidney Poitier and Diana Ross to Barack and Michelle Obama. But it had fallen into financial difficulties in recent years and ceased to appear in print form in 2019.
The magazine and its sister publication, Jet, were acquired by Jackson and a partner in 2016.
According to the SEC, Shumake allegedly conspired with Jackson and Nicole Birch to crowdfund-funded fraudulent securities offers for two cannabis and hemp companies, Transatlantic Real Estate LLC and 420 Real Estate LLC.
While Shumake was actually in charge of the companies, the SEC said he had kept his involvement hidden from the public over fears that his 2017 criminal conviction for mortgage fraud could frighten investors. Instead, crowdfunding efforts claimed Birch and Jackson were in charge.
The SEC said Shumake and Birch raised $ 1.020 million from retail investors through Transatlantic Real Estate, and that Shumake and Jackson raised $ 888,000 through 420 Real Estate.
The three would then have used the money for their own purposes rather than investing in the real estate projects they had promised to those who gave them the money. Jackson funneled nearly $ 300,000 of money into Ebony, according to the complaint,
A lawyer for Birch could not be reached immediately.
The SEC said it also accused the crowdfunding platform the three had used, TruCrowd Inc., and its chief executive, Vincent Petrescu, of failing to properly vet the companies using its services.
“Crowdfunding offerings allow issuers to cast a wide net for potential investors, emphasizing the importance of full and honest disclosure,” said Gurbir S. Grewal, director of the SEC’s enforcement division. . “As companies continue to raise funds through crowdfunding offers, we will hold issuers, custodians and individuals accountable and enforce the protections in place for all investors. “
Petrescu and TruCrowd did not immediately return a message requesting comment.
The SEC complaint, which was filed in federal court in the Eastern District of Michigan, accuses Shumake, Birch and Jackson of violating anti-fraud and registration laws and calls for financial penalties and injunctions prohibiting them from ” perform the duties of corporate officer.
He accuses TruCrowd and Petrescu of breaking crowdfunding rules and calls for financial sanctions against the company. The SEC said the case marks the first time that a crowdfunding platform has been indicted for helping to support such alleged fraud.
