Three women who ran a Lancaster-based beverage company were ordered to pay more than $14 million in combined penalties for allegedly defrauding and misleading investors over a three-year period, according to the Securities and Exchange Commission.
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 in full, as ordered on Thursday in the United States District Court. for the Central District of California.
The company was fined $12 million and $739,000 in prejudgment interest. Rose owes an additional $669,687, while Shelby and Dirden were fined another $334,842 each.
Calls to a phone number listed for Shelby and Dirden were not returned.
Rose was arrested last week after a federal grand jury indictment alleged he took more than $13.5 million from more than 1,000 investors. The trial is scheduled for March 19.
Rose submitted a 34-minute YouTube video in response. In the text, Rose said she endured “the profound injustice of racism, discrimination, and a targeted campaign orchestrated by the Securities and Exchange Commission.” She claimed that she spent more than a million dollars on her legal defense and that her “resources to sustain the legal battle were exhausted.”
He said the SEC never took into account “all of my legitimate business expenses,” so it “falsely represented our company and its subsidiaries as mere fronts.” Rose claimed the government failed to take into account business expenses, including payroll for 20 employees, marketing and promotions, utility bills, trademarks, lease and rental of five locations, travel expenses, research and development.
A call to the SEC's media department was not immediately returned.
The SEC filed an initial request civil complaint September 14, 2021. The agency said that between 2017 and 2019, She Beverage raised more than $15 million through unregistered stock sales to more than 2,000 customers and investors nationwide.
The commission wrote that the company “falsely represented to investors” that 30% of the financing would be allocated to the purchase of beverages. In reality, about 2% went toward drinks, while “at least $7.5 million” was redirected to pay for “cars and trucks, rentals, luxury retail items, and trips to casinos,” the complaint alleges.
The commission said the three executives withdrew $6 million in cash and wire transfers and spent $1.2 million at casinos, along with $180,000 on eight cars and trucks for personal use and to pay off a loan on a Porsche owned by Shelby. , according to the commission. .
Other expenses alleged by the SEC included $100,000 for lease payments on a home and $50,000 for luxury items such as Gucci and Louis Vuitton handbags.
According to the commission, the founders “exaggerated and mischaracterized” the company's revenue to trick people into investing. She Beverage informed investors that the company had built a brewery, when construction was not completed, and falsely promoted the brand's bottled water as “proprietary” and “FDA approved,” the SEC alleged in its complaint. The trio told investors they had “millions of their own money” invested in the company, while their share was “much more modest.” The defendants also claimed that outsiders were interested in purchasing the company for hundreds of millions of dollars; the SEC said there were no offers.
The commission also claims that executives told investors that an initial public offering “was imminent” when they had not even begun to complete the paperwork.
She Beverage promoted itself as “a woman-owned beverage manufacturer,” selling beer, wine, spirits and bottled water aimed at women, according to commission documents.
Between 2018 and 2019, Rose, Shelby and Dirden hosted three to four in-person meetings involving investors, according to the commission. They provided samples of the product and solicited investors directly, according to the SEC.
