Malibu Man Convicted in $25 Million Fraud Scheme
A 63-year-old resident of Malibu has been found guilty of fraud after orchestrating a scheme to defraud investors of more than $25 million.
The Scheme Explained
Bernhard Eugen Fritsch, the owner of StarClub, falsely promoted an app named StarSite purportedly designed to help social media influencers monetize their endorsements more effectively. Between 2014 and 2017, Fritsch misled potential investors by claiming that his company was on the brink of securing major deals, including partnerships with high-profile entities like Disney.
Additionally, he fabricated revenue figures, asserting that StarClub had generated $15 million in revenue during 2015. This level of deception resulted in a significant influx of capital from investors, with one individual alone contributing over $20 million to the fraudulent cause.
Financial Misappropriation
According to the U.S. Department of Justice, Fritsch’s claims were effective in attracting investment, ultimately amassing a total of around $25 million. However, instead of utilizing these funds for the development of the app or business expansion, Fritsch chose to finance his luxurious lifestyle. His expenditures included:
- Luxury vehicles, notably a McLaren and a Rolls-Royce
- Renovations to his Malibu mansion near Carbon Beach
- Improvements to his yacht
As a result of his fraudulent activities, these luxury items have been seized and are now subject to forfeiture proceedings.
Legal Outcome
On Thursday, Fritsch was convicted on one count of wire fraud, while he was acquitted on another charge. Although the specific date for his sentencing has not yet been set, he faces a potential maximum sentence of up to 20 years in federal prison.
