A person from Malibu has been convicted of scamming traders and Hollywood stars out of greater than $20 million by means of false claims about his celeb app’s enterprise efficiency.
Bernhard Eugen Fritsch, the founder and CEO of StarClub Inc., a Santa Monica-based tech firm, was held accountable for an elaborate fraud that fueled his lavish way of life, Fox Information Digital has discovered.
Fritsch, 63, was discovered responsible by a jury on Thursday of 1 rely of wire fraud after it was revealed that he lied to traders in regards to the monetary success and future potential of his tech firm, in accordance with the Division of Justice.
HOLLYWOOD DIRECTOR ARRESTED FOR ALLEGEDLY CHEATING NETFLIX OUT OF $11M
He falsely promised that the corporate’s app, StarSite, would assist celebrities and social media influencers monetize their model endorsements.
Host Tyrese Gibson (L) and Founder and CEO of StarClub Bernhard Fritsch attend StarClub Inc.’s Non-public Get together hosted by Tyrese Gibson in November 11, 2014. (Mike Windle/Getty Photographs for StarClub)
As an alternative of utilizing the funds for the app’s improvement, Fritsch spent thousands and thousands on luxurious vehicles, yachts, and a multimillion-dollar Malibu mansion, the press launch said.
From 2014 to 2017, Fritsch raised over $20 million, pitching StarClub as a game-changer for the leisure business. He claimed the app would enable celebrities to simply submit branded content material on social media, generate income from promoting and share earnings with influencers.
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As Fritsch pitched the StarClub providing to traders, he made a number of false and fraudulent claims, together with that his firm was on the verge of coming into business offers with, or acquiring investments and buyout provides from main media corporations akin to Disney – that StarClub earned $15 million in income in 2015.
Mannequin Khadija Neumann (L) and Founder and CEO of StarClub Bernhard Fritsch attend StarClub Inc.’s Non-public Get together. (Mike Windle/Getty Photographs for StarClub)
As an alternative of utilizing the funds to develop the corporate or enhance its know-how, Fritsch bought luxurious vehicles like a McLaren and a Rolls-Royce, renovated his multimillion-dollar Malibu residence and even made pricey upgrades to his yacht.
Legislation enforcement seized the yacht, McLaren and the Rolls-Royce, and they’re topic to forfeiture proceedings.
One sufferer invested greater than $20 million in StarClub over the course of two years, based mostly on Fritsch’s false statements, in accordance with the Division of Justice.
This sufferer additionally launched Fritsch to different victims who invested thousands and thousands of extra funds within the firm. Prosecutors estimate that Fritsch precipitated no less than roughly $25 million in sufferer losses due to his scheme.
In 2014, singer and actor Tyrese hosted a non-public celebration for StarClub Inc. (Mike Windle/Getty Photographs for StarClub)
Sources near Fox Information Digital have discovered that Hollywood celebrities, together with Enrique Iglesias and Tyrese Gibson, could also be concerned on this high-profile scheme.
In 2014, singer and actor Tyrese hosted a non-public celebration for StarClub Inc. Actresses together with Caitlin O’Connor, Elise Neal, rapper Trinidad James and mannequin Khadija Neumann attended the star-studded occasion.
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In the meantime, Fritsch has been sued in Los Angeles County Superior Courtroom 3 times over allegations of fraudulent monetary schemes.
Music govt Haqq Islam and his firm sued StarClub and Fritsch in 2013, claiming breach of contract and fraud, in accordance with The Los Angeles Occasions.
Islam alleged that Fritsch owed him $750,000 for luring Hollywood stars akin to Jessica Simpson to satisfy with Fritsch and contemplate collaborating in StarClub’s enterprise ventures, in accordance with reporting by Courthouse Information Service.
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Reps for Tyrese, Iglesias and Simpson didn’t instantly reply to Fox Information Digital’s request for remark.
The jury discovered Fritsch not responsible of a second wire fraud rely. He stays free on bond.
A sentencing listening to is scheduled for Fritsch within the upcoming months. Fritsch faces a statutory most sentence of 20 years in federal jail.
