SEC Sues Beverage Company Alleging Investment Fraud

On Tuesday, the Securities and Exchange Commission sued California company SHE Beverage Company, Inc. — and its principals personally — alleging that the company’s fundraising violated SEC laws and regulations, constituting fraud. The suit, which is venued in the Central District of California, seeks injunctions, disgorgement, and civil penalties.

The complaint states that SHE Beverage was incorporated in 2015 and “produces beverages targeting female customers” — and “raised over $15 million from unregistered stock sales to more than 2,000 investors.” But the SEC alleges that although SHE Beverage promised to “use 30% of the offering proceeds to purchase beverage inventory,” the company “spent only approximately 2% of the monies they raised on beverages.” 

The complaint goes on to state that the company and its principals withdrew $7.5 million  — approximately half of the investments  — “in cash withdrawals and to pay personal expenses such as cars and trucks, rent, luxury retail goods, and trips to casinos.”

The SEC’s complaint also includes allegations of false statements, including the company’s claims that it launched its own brewery (though it hadn’t completed construction), its water was “proprietary” and “FDA approved,” and its IPO was “imminent” — all of which the SEC claims are false.

Other fraud allegations include SHE Beverage’s statement that it had “recent offers to buy our brand (which range from 120 Million to 500 Million),” but the SEC says that statement was false: Neither of the purported acquiring had even engaged in substantive negotiations with SHE Beverage.

Although SHE Beverage allegedly raised $15 million in unregistered securities, the SEC claims that the company “has never been registered with the SEC in any capacity, has never had a class of securities registered with the SEC.”  

SHE Beverage has not yet answered the complaint.