Palmdale woman arrested for alleged securities fraud

PALMDALE-  A Palmdale woman was arrested on federal charges alleging she obtained more than $13.5 million from at least 1,000 investors for her beverage company, the lion’s share of which she spent at casinos, on luxury items and cars, and renting a house.

Lupe L. Rose, 54, of Palmdale, is charged with 38 counts of securities fraud and one count of making false statements to federal investigators, according to the U.S. Attorney’s Office. Rose pleaded not guilty at her arraignment Monday, Feb. 5, in federal court and a March 19 trial was scheduled. A federal magistrate judge ordered Rose freed on $20,000 bond.

According to the indictment, Rose in 2009 founded She Beverage Co. Inc., a Lancaster-based beverage manufacturer of which she was the company’s president, CEO and chairman of its board of directors. Rose promoted She Beverage as a woman-owned beverage manufacturer that marketed — primarily to female consumers — and sold beer, wine, bottled water and other products purportedly designed specifically to cater to women’s needs.

Court papers show that from 2017 to December 2020, Rose raised investments in She Beverage amounting to more than $13.5 million from more than 1,000 investors nationwide. Specifically, she caused the company to offer and sell its shares through an offering memorandum, offering shares in the company at a price of $2.50 per share. Rose also hosted in-person meetings for current and prospective investors, some of which were live-streamed to out-of-town investors, the indictment alleges.

Prosecutors allege that even though Rose marketed She Beverage as a successful company, in fact, she used the vast majority of the $13.5 million she raised from investors personally to enrich herself, her family and friends. She also used victim investor money to “purchase” shell companies to give the false appearance that She Beverage was expanding, according to the indictment.

Contrary to Rose’s written promises to spend 30% of money raised from investors on inventory, she allegedly spent only 2.5% of investors’ money on inventory from 2015 to 2021. From 2016 to 2021, Rose caused $6 million of victim investor funds raised in the company offerings to be used for the benefit of herself and her friends, the indictment alleges.

According to the U.S. Attorney’s Office, she spent more than $1 million of company funds at casinos, and she also used company money to purchase cars and trucks for family and friends. She allegedly also used company money to pay for a lease on a house she rented and used company money to purchase luxury clothing from retailers such as Gucci and Louis Vuitton.

Rose lied to investors by stating in 2018 that her company had “generated approximately $4-5 million dollars in revenue” when, in fact, that year She Beverage had sold less than $263,000 in merchandise, the indictment alleges. If convicted of all charges, Rose would face up to 20 years in federal prison for each securities fraud count and up to five years in federal prison for the false statements count, prosecutors noted.

In September 2021, the U.S. Securities and Exchange Commission sued Rose for allegedly fraudulently raising millions of dollars from She Beverage investors throughout the United States. On Jan. 16, U.S. District Judge Christina A. Snyder imposed a judgment finding Rose, She Beverage Co. Inc., and two others jointly and severally liable for disgorgement of about $12 million, representing net profits from the fraud, as well as $738,774 in pre-judgment interest, court papers show.

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