A Lancaster company that markets beverages to women has been ordered to pay about $12.7 million to the federal government for allegedly defrauding thousands of investors to fund the luxurious lifestyles of its top officers, the U.S. Securities and Exchange Commission announced Thursday, Feb. 15.
Also see: Lancaster beverage company operator arrested for $13.5 million in securities fraud
The SEC said it also obtained final judgments against three executives of SHE Beverage Co. — Chief Executive Officer Lupe Rose, Vice President Sonja F. Shelby and Chief Operations Officer Katherine E. Dirden — for the alleged fraud that occurred from 2017 to 2019.
Rose, a Palmdale resident, has been ordered to pay $669,687. She is awaiting trial in a separate criminal case charging her with 38 counts of securities fraud and one count of making false statements to federal investigators.
“I am innocent,” Rose, who is biracial, said Thursday. “I’ve been a victim of racial discrimination.”
Rose further proclaimed the victimization of her Black, woman-owned company in a 34-minute YouTube video.
Shelby, who lives in Palmdale, and Dirden, who resides in Lancaster, will each be required to pay $334,842, according to the SEC. They did not immediately respond Thursday to phone calls seeking comment.
The three defendants raised more than $15 million from unregistered stock sales and falsely represented to investors they would use 30% of the proceeds to purchase beverage inventory when they actually only spent 2% for that purpose, according to a September 2021 SEC lawsuit filed in federal court.
“In the meantime, they misappropriated roughly half the offering proceeds — at least $7.5 million — in cash withdrawals and to pay personal expenses such as cars and trucks, rent, luxury retail goods, and trips to casinos,” the suit says.
The SEC alleges the defendants carried out “aggressive fundraising” by overstating and mischaracterizing SHE’s revenues.
“They falsely touted the company’s bottled water as ‘proprietary’ and ‘FDA approved,’ when it was neither,” the suit says. “Defendants claimed the company had received acquisition offers in the hundreds of millions of dollars. In reality, it had no such offers. The principals claimed to have millions of their own money invested in the company, whereas their investments were much more modest.”
Furthermore, the defendants allegedly bragged that SHE had acquired a cannabis-related company, concealing the fact that it was obtained from the sisters of one of the defendants with no independent valuation and no operations or sales.
Rose, Shelby and Dirden also claimed SHE had launched its own brewery even though it had not even completed construction, according to the SEC.
The defendants allegedly solicited investors in several states over the internet to purchase stock in SHE with cash, checks, credit cards, and electronic payments. However, SHE’s fraudulent stock offerings were not registered with the SEC, and, as a result, investors lacked information about the company’s financial condition, the suit says.
Source: Orange County Register
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