The top officers of a Lancaster company that markets beverages to women allegedly defrauded at least 2,000 investors out of more than $15 million largely to finance their luxurious lifestyle, according to the Securities and Exchange Commission.
In a lawsuit filed Tuesday in U.S. District Court, 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., along with Chief Operations Officer Katherine E. Dirden, 46, of Lancaster.
Brent Baker, an attorney representing SHE Beverage and the three defendants, said in an email Thursday that his clients are eager “to have all of the facts come out and to put this matter behind them as soon as possible.”
From 2017 to 2019, the 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, the SEC alleges.
“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 SHE had acquired a cannabis-related company, concealing 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.
“SHE Beverage’s fraudulent stock offering was not registered with the SEC,” the lawsuit says. “Thus, investors lacked important information about the company’s financial condition.”
