Three girls who ran a Lancaster-based beverage firm had been ordered to pay greater than $14 million in mixed penalties for allegedly defrauding and deceptive buyers over a three-year interval, in keeping with the Securities and Alternate Fee.
She Beverage Co. and its executives — Lupe L. Rose, 54, and Sonja F. Shelby, 60, of Palmdale and Katherine Dirden, 48, of Lancaster — have 30 days to pay the entire, as ordered Thursday by the U.S. District Courtroom for the Central District of California.
The corporate was slapped with a $12-million fantastic and $739,000 in prejudgment curiosity. Rose owes a further $669,687, whereas Shelby and Dirden had been every fined one other $334,842.
Calls to a telephone quantity listed for Shelby and Dirden weren’t returned.
Rose was arrested final week after a federal grand jury indictment alleged she had taken greater than $13.5 million from greater than 1,000 buyers. A trial is scheduled for March 19.
Rose offered a 34-minute YouTube video as her response. In textual content, Rose mentioned she endured “the profound injustice of racism, discrimination, and a focused marketing campaign orchestrated by the Securities and Alternate Fee.” She claimed that she spent greater than $1 million in her authorized protection and that her “assets to maintain the authorized battle had been exhausted.”
She mentioned the SEC by no means took into consideration “all my authentic enterprise bills,” thus “falsely portraying our firm and its subsidiaries as mere shells.” Rose claimed the federal government disregarded enterprise bills, together with payroll for 20 staff, advertising and marketing and promotions, utility payments, logos, lease and hire for 5 places, journey bills, analysis and improvement.
A name to the SEC’s media division was not instantly answered.
The SEC filed an preliminary civil grievance Sept. 14, 2021. The company claimed that between 2017 and 2019, She Beverage raised greater than $15 million from unregistered inventory gross sales to greater than 2,000 shoppers and buyers nationwide.
The fee wrote that the corporate “falsely represented to buyers” that 30% of funding can be allotted for beverage purchases. In actuality, round 2% went towards drinks, whereas “at the least $7.5 million” was redirected to pay for “automobiles and vans, hire, luxurious retail items and journeys to casinos,” the grievance alleges.
The fee mentioned the three executives withdrew $6 million in money and transfers and spent $1.2 million of that in casinos, together with $180,000 for eight automobiles and vans for private use and to repay a mortgage for a Porsche owned by Shelby, in keeping with the fee.
Different bills alleged by the SEC included $100,000 for lease funds on a home and $50,000 for luxurious items corresponding to Gucci and Louis Vuitton baggage.
The founders “overstated and mischaracterized” firm income to trick individuals into investing, in keeping with the fee. She Beverage knowledgeable buyers that the corporate had constructed a brewery, when development was not accomplished, and falsely touted the model’s bottled water as “proprietary” and “FDA-approved,” the SEC alleged in its lawsuit. The trio advised buyers they’d “thousands and thousands of their very own cash” invested within the firm, whereas their portion was “far more modest.” The defendants additionally claimed that outsiders had been curious about shopping for the corporate for a whole lot of thousands and thousands of {dollars}; the SEC mentioned there have been no affords.
The fee additionally claims that the executives advised buyers that an preliminary public providing “was imminent” once they hadn’t even begun to fill out paperwork.
She Beverage promoted itself as “a women-owned beverage producer,” promoting beer, wine, spirits and bottled water marketed to girls, in keeping with fee filings.
Between 2018 and 2019, Rose, Shelby and Dirden hosted three to 4 in-person conferences that included buyers, in keeping with the fee. They supplied samples of the product and straight solicited buyers, in keeping with the SEC.
