A Malibu man has been convicted for masterminding a $20 million fraud scheme that targeted Hollywood elites and unsuspecting investors.
At a Glance
- Bernhard Eugen Fritsch, 63, convicted of wire fraud over a $20 million scam.
- He misled investors via the company StarClub Inc. with false promises.
- Spending was on luxury items instead of app development.
- His lavish assets are now subject to forfeiture.
Fraudulent Scheme Uncovered
Bernhard Eugen Fritsch, a 63-year-old Malibu resident, was recently convicted of wire fraud. He orchestrated a fraudulent investment scheme under StarClub Inc., a company promising celebrities ways to monetize brand endorsements through an app. The scheme extracted over $20 million from various investors, including Hollywood celebrities, by luring them with stories of substantial returns.
Watch coverage of the alleged fraud here.
Fritsch headed the misleading venture from 2014 to 2017, raising colossal sums while falsely indicating potential deals with major media entities like Disney. Unfortunately, the promises were fabrications designed to exploit investor trust and tap into extensive financial contributions.
Extravagant Lifestyle at Investors’ Expense
Instead of using the funds for technological development, Fritsch indulged in a lavish lifestyle. Authorities have secured several opulent items for forfeiture, including luxury cars like a McLaren and Rolls-Royce, yachts, and a sprawling Malibu estate. These assets, bought with investor money, highlighted the gross misuse of funds intended for app development.
“From 2014 to 2017, Fritsch raised more than $20 million from investors to build out the company’s app, also known as StarSite, claiming celebrities and influencers would use the technology to post content on social media sites such as Facebook. At the same time, the app would deliver advertising content and share ad revenue with the celebrity poster” says the DOJ.
This lavish portrayal underscores the risks individuals take by investing with those who appear credible based on personal networks but deploy funds to support high-end desires rather than actual business objectives.
Consequences Loom for Fritsch
Prosecutors assess the financial damage of Fritsch’s fraud to be at least $25 million. This case reiterates the severe repercussions for financial deception and how readily deceit can infiltrate esteemed circles. Fritsch faces sentencing, and the legal system may impose a maximum 20-year federal prison sentence.
“While pitching the StarClub offering to investors, Fritsch made several false and fraudulent claims, including that StarClub was on the verge of entering commercial deals with, or obtaining investments and buyout offers from major media companies such as Disney; that StarClub had earned $15 million in revenue in 2015; and that StarClub’s current investors included major media companies and a global investment banking firm” says the DOJ.
This outcome poses a poignant reminder of the vigilance necessary when investing. Not only can financial schemes impact everyday investors, but even those within powerful networks aren’t immune to disillusionments wrought by fraudulent promises.
