SEC Accuses Snack Company of $2M Investor Fraud

SEC Accuses Snack Company of $2M Investor Fraud

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?

If you believe you have been the victim of an investment scheme, you may have certain legal rights that require your immediate attention.

Call an Investment Fraud Attorney Today

If you are looking for an investment fraud attorney to review your rights and options, the investment fraud lawyers at Dimond Kaplan & Rothstein, P.A. have recovered over $100 million from banks and brokerage firms for their wrongful actions.

With offices in Los AngelesNew YorkWest Palm Beach and Miami, our investment fraud attorneys represent clients nationwide and may be able to help you recover your investment losses.

Contact an investment fraud attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or consultation to review your rights and option

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Legacy Home Builders Scam Investor of $4.5 Million

Legacy Home Builders Scam Investor

An investor has launched allegations against Miami-based Legacy Home Builders, accusing the company and its principals of selling unregistered securities. The investor, Manuel Hernandez claims that he lost $4.5 million.

The case will go before Miami-Dade court, where Hernandez’s allegations lay out a series of misrepresentations by defendants Luis and Liliana Rodriguez. Hernandez’s accuses the pair of agreeing to give him a security interest in several development projects and a guaranteed return of 50 percent in exchange for an investment. Hernandez did not receive the security interest or the investment return.

The complaint includes three counts related to violations of the registration and anti-fraud provisions of federal securities laws. Hernandez claims that his investments in the Legacy projects and additional investment opportunities marketed by the company qualified as securities under the Securities and Exchange Acts of 1933 and 1934. Though it is required for all securities to be registered with the U.S. Securities and Exchange Commission, the company failed to do so.

The suit names Luis and Liliana Rodriguez; three companies owned by the pair: Legacy Home Builders LLC, Legacy Homebuilders Kendall LLC and Enchanted Court Developers LLC; and Parlade and his law firm.

Legacy Home Builders Caught in Lie

Hernandez claims that Rodriguez admitted to owing Hernandez money, sending a signed document stating that profits from the sale of the last nine houses in the Enchanted Path Subdivision, one of Legacy’s projects, would go to him as reimbursement.

As of this week, the property at Enchanted Path Subdivision is designated for ‘future development’ and no plans for its future development have been made clear.

Rodriguez also falsely represented to Hernandez his experience in building residential projects. While Rodriguez said he had more than 20 years of experience, Legacy has been in operation for less than five years.

The claims also lay out a number of deceptive actions taken by the Rodriguez’s and their lawyer. According to claims, much of the money invested by Hernandez was sent to a trust account controlled by Parlade’s law firm, who then made several unauthorized disbursements. Further to that, the money also was used as collateral for construction loans for other developments, which was not shared with Hernandez.

Hernandez later discovered that Rodriguez needed the money because he filed for Chapter 7 bankruptcy in 2010 and also was facing an adversary suit filed against him in bankruptcy court by Sabadell United Bank.

Legacy Home Builders was created with Liliana Rodriguez as the sole manager to use as a shell company, so that assets could secretly be transferred from Legacy to other companies benefitting Luis Rodriguez.

Call an Investment Fraud Attorney Today

If you are looking for an attorney to review your rights and options, the securities lawyers at Dimond Kaplan & Rothstein, P.A. may be able to help you recover your investment losses. With offices in Los AngelesNew YorkWest Palm Beach and Miami, their investment fraud attorneys represent clients nationwide and can help you review your rights and options.

Contact an attorney at Dimond Kaplan & Rothstein, P.A. today to schedule an appointment or free consultation.

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