The U.S. Securities and Exchange Commission (SEC) and federal prosecutors have filed fraud charges against a trio of business associates accused of raising approximately $2 million for a caffeinated chocolate snack company under false pretenses.
According to the U.S. Attorney’s Office for the Southern District of New York, Lisa Bershan, 60, her husband Barry Schwartz, 71, and their business partner Joel Margulies, 72, are facing securities fraud, wire fraud and conspiracy charges. The charges are in connection with an alleged scheme to defraud investors in a company alternatively named The Awake Co. and Starship Snacks.
Business Associates Engaged in Investor Fraud
According to prosecutors, from August 2015 to August 2017, the trio made false statements to numerous investors, claiming that their snack company had a deal with Monster Energy Corp., and later was in talks to be acquired by The Coca-Cola Co. According to prosecutors, who worked with the FBI on the investigation, neither deal was under negotiation. In addition, court documents show that investors were told that their investments would be personally guaranteed by Bershan with a 5 percent interest payment.
The SEC’s complaint says that those guarantees were never made. Instead of using money to develop the business or invest in product development, investors’ money was used to fund the trio’s lavish lifestyle. Bershan and Schwartz allegedly spent more than $39,000 on plastic surgery; more than $209,000 on retail purchases, including jewelry and clothes; more than $11,900 at a Mercedes dealership; and hundreds of thousands of dollars on luxury housing.
Court documents state that investor updates included false assurances by the trio that the investments were secure, offered an excuse for the delay, and/or claimed that a Monster or Coke deal was imminent, misleading investors.
SEC Files Civil Suit for Violations of Anti-Fraud Provisions
The SEC also has filed a separate civil suit against the three defendants, accusing them of violating anti-fraud provisions of federal securities laws and a related SEC anti-fraud rule. It seeks disgorgement plus interest and civil penalties.
Bershan and Schwartz were presented in federal court in Atlanta, and Margulies was presented in federal court in Tennessee. They have not yet been indicted.
Have You Lost Money in an Investment Scheme?
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