Yes!
Case 2:21-cv-12193-AJT-APP ECF No. 18, PageID.228 Filed 12/20/21 Page 1 of 10
Robert's attorney filed another appeal on 12/23.
Here is the main part of the SEC charges against Shumake.
Shumake Explores Various Means to Raise Money through Securities
Offerings
19. Following his guilty plea, but before the end of his probationary
period and the court order prohibiting him from having access to other people’s
money, Shumake began taking steps to raise money from the public to enter the
cannabis industries. Ultimately, he pursued crowdfunding offerings as a means to
raise funds.
20. Crowdfunding offerings are governed by the securities transaction
registration provisions of the Securities Act [17 U.S.C. §§ 77(a), et seq.] and
Regulation Crowdfunding thereunder [17 C.F.R. § 227.100, et seq.]. From 2018
through 2020—the years relevant to this Complaint—these crowdfunding
provisions allowed an unregistered offering of up to $1,070,000 through an
intermediary, in this case, a funding portal registered under Rule 400 of Regulation
Case 2:21-cv-12193-AJT-APP ECF No. 1, PageID.7 Filed 09/20/21 Page 7 of 40
- 8 -
Crowdfunding. Issuers could offer and sell their securities through the
intermediary’s platform on the internet. Prior to the start of the crowdfunding
offering, the issuer was required to file with the SEC a “Form C,” and disclose
certain information about the issuer and the offering through the Form C and
offering statement. For instance, issuers relying on the crowdfunding registration
exemption were required to disclose, among other information, the names of all the
issuer’s officers, directors, and persons occupying a similar status or performing a
similar function; the purpose and intended use of the offering proceeds; relatedparty transactions with the issuer’s officers and promoters that are, in the
aggregate, in excess of five percent of the aggregate capital that the issuer seeks to
raise; and any material information necessary in order to make the statements made
not misleading, in light of the circumstances under which they were made.
Regulation Crowdfunding also requires that the funding portal post the offering
statement for each issuer on its internet platform so that all prospective investors
have access to the same information relating to the issuer’s offering.
21. In September 2018, Shumake enlisted Birch, an attorney with whom
he was in a personal relationship, to form Transatlantic Real Estate, with Birch
holding the positions of CEO and sole member. Shumake also convinced Birch to
raise funds through a crowdfunding offering and to hide Shumake’s involvement.
Case 2:21-cv-12193-AJT-APP ECF No. 1, PageID.8 Filed 09/20/21 Page 8 of 40
- 9 -
22. Transatlantic Real Estate’s mailing address was a UPS store in Grosse
Pointe Farms, near where Shumake lived, rather than in Georgia where Birch lived.
23. Shumake set up Bangi in November 2018, while he was working with
Birch to conduct the Transatlantic Real Estate crowdfunding offering. Bangi’s
address at the time was the same UPS store in Grosse Pointe Farms that
Transatlantic Real Estate used.
24. According to its website, Bangi “acquires specialized assets including
hemp and cannabis farms, dispensaries, commercial real estate, industrial real
estate, and leases real estate to the multi-billion dollar and growing cannabis
industry.”
25. Shumake regularly attended and participated in Bangi Board
meetings, gave direction to the company’s officers and directors, and conducted
business on behalf of Bangi. Board minutes identify Shumake as the founder of
Bangi. Bangi Directors and Shumake discussed his criminal history and its
potential impact on prospective investors. Despite his involvement in the affairs of
Bangi, Shumake elected not to serve as an officer or director of the company. Nor
was he listed on Bangi’s website.
26. Shumake explored the possibility of Bangi conducting an offering
under SEC Regulation A+ [17 C.F.R. § 230.251, et seq.], which permitted higher
Case 2:21-cv-12193-AJT-APP ECF No. 1, PageID.9 Filed 09/20/21 Page 9 of 40
- 10 -
fundraising amounts than those allowed under Regulation Crowdfunding.
Ultimately, an offering for Bangi never occurred.
27. In April 2019, Shumake enlisted Jackson, a friend and Bangi director,
to form 420 Real Estate, with Jackson as the CEO and sole member. Shumake
convinced Jackson to utilize 420 Real Estate as a vehicle for raising funds through
a crowdfunding offering (the “420 Real Estate offering”). Shumake also
convinced Jackson to hide Shumake’s involvement in the 420 Real Estate offering.
28. Shumake discussed with Jackson his plans to use money raised
through the 420 Real Estate offering to fund Bangi.
29. Shumake’s name was not on any of the offering documents for
Transatlantic Real Estate or 420 Real Estate. Shumake, Jackson, and Birch all
knew that the disclosure of Shumake’s criminal past could hinder fundraising.
Therefore, they concealed Shumake’s involvement, and Birch and Jackson falsely
held themselves out as the sole persons with authority over the offerings.
