Lancaster beverage company defrauded investors over $ 15 million, SEC says – Daily News
Senior executives at a Lancaster company that markets drinks to women have allegedly defrauded at least 2,000 investors of more than $ 15 million largely to fund their luxury lifestyle, according to the Securities and Exchange Commission.
In a lawsuit filed in U.S. District Court on Tuesday, the SEC is seeking permanent injunctions and civil penalties against Palmdale residents Lupe L. Rose, 52, and Sonja F. Shelby, 58, co -Founders of SHE Beverage Co., with Chief Operating Officer Katherine E. Dirden, 46, of Lancaster.
Brent Baker, a lawyer representing SHE Beverage and the three defendants, said in an email Thursday that his clients were eager “to get all the facts out and put this case behind them as soon as possible.”
From 2017 to 2019, the defendants raised over $ 15 million through sales of unregistered shares and falsely told investors that they would use 30% of the proceeds to buy drinks stocks when they didn’t. actually spent only 2% for this purpose, the SEC alleges.
“In the meantime, they have diverted about half of the proceeds of the offering – at least $ 7.5 million – into cash withdrawals and to pay for personal expenses such as cars and trucks, rents, luxury goods and trips to casinos, ”says the lawsuit.
The SEC alleges that the defendants conducted “aggressive fundraising” by overstating and distorting SHE’s earnings.
“They falsely touted the company’s bottled water as ‘proprietary’ and ‘FDA approved’ when neither was,” the lawsuit said. “The defendants claimed that the company had received takeover bids worth several hundred million dollars. In reality, he had no such offers. Executives claimed to have millions of their own money invested in the business, while their investments were much smaller.
Further, the defendants allegedly boasted that SHE had acquired a cannabis-related company, concealing that it had been obtained from the sisters of one of the defendants without independent valuation and without transactions or sales.
Rose, Shelby and Dirden also claimed that SHE had started its own brewery even though it hadn’t even completed construction, according to the SEC.
The defendants are said to have solicited investors in several states over the Internet to purchase SHE shares by cash, check, credit card and electronic payment.
“SHE Beverage’s fraudulent stock offering has not been registered with the SEC,” the lawsuit says. “As a result, investors lacked important information about the financial condition of the company.”