A Malibu man, Bernhard Eugen Fritsch, has been convicted of wire fraud after fraudulently obtaining approximately $25 million in investments for his tech company, StarClub. This money was intended to fund the development of an application called StarSite, which purportedly aimed to help celebrities and influencers monetize their social media presence through sponsored advertisements. However, prosecutors revealed that Fritsch used a significant portion of these funds to support an extravagant lifestyle, which included purchases like a Rolls-Royce, mansion near Carbon Beach, and yacht.
The Case Unfolds
During a nine-day trial, Fritsch was found guilty of one count of wire fraud, with the potential for a prison sentence of up to 20 years, as reported by the U.S. Department of Justice. Despite facing a second wire fraud count, the jury acquitted him. Fritsch is currently out on bond and is expected to attend a sentencing hearing in the upcoming months. His attorney has not provided any comments following the verdict.
Between 2014 and 2017, Fritsch managed to raise over $20 million from investors under false pretenses. He allegedly misrepresented his company’s financial standing by falsely claiming that major media companies and a global investment banking firm had invested in StarClub. Fritsch also asserted that StarClub generated $15 million in revenue in 2015 and was on the verge of striking a lucrative deal with Disney. Unfortunately, none of these claims were substantiated by the truth. Instead of investing the funds into his tech company, Fritsch diverted the money for personal gain, leading to an estimated loss of $25 million for those involved in the scheme.
A Lavish Lifestyle Funded by Fraud
The U.S. Department of Justice detailed how Fritsch utilized the ill-gotten gains to indulge in a luxurious lifestyle. This included the purchase of high-end vehicles like a McLaren and a Rolls-Royce, as well as refurbishing his yacht and renovating his opulent Malibu mansion near Carbon Beach. The Justice Department emphasized that the victims of this fraudulent scheme suffered substantial financial losses, with one investor contributing over $20 million and introducing Fritsch to other individuals who collectively invested millions more.
Legal Battles and Ongoing Lawsuits
In addition to the federal trial, Fritsch has been embroiled in multiple legal battles in L.A. County Superior Court. Notably, he faced lawsuits from industry executive Haqq Islam and his company, Eugene McBurney, and Bermuda-based hedge fund Harrington Global Opportunities. These lawsuits alleged breach of contract and fraud, with claims of substantial financial damages due to deceptive practices by StarClub and Fritsch. A trial setting conference for the lawsuit involving McBurney and Harrington Global Opportunities is set for June 25, while the lawsuit from Islam remains in progress.
Marc Montgomery, Fritsch’s cousin, also filed a lawsuit against him, asserting that Fritsch owes over $593,000 in loans and interest. Montgomery alleged that Fritsch used the borrowed funds to cover personal expenses such as mortgage payments, car loans, and utilities. This case is currently pending, adding to the legal woes faced by Fritsch in connection with his fraudulent activities.
As the legal proceedings continue and the aftermath of Fritsch’s fraudulent actions unfolds, it serves as a stark reminder of the importance of due diligence and transparency in investment ventures. The impact of financial crimes extends beyond monetary losses, affecting the trust and integrity of the financial ecosystem. The case of Bernhard Eugen Fritsch underscores the significance of regulatory oversight and investor vigilance in safeguarding against fraudulent schemes that can have far-reaching consequences for individuals and the broader financial landscape.
