The Malibu man fraudulently won an estimated $25 million investment in his tech company and was convicted of using the funds to raise luxury lifestyles, including Rolls-Royce, Carbon Beach, apartment complexes and yachts, authorities said.
After a nine-day trial, 63-year-old Bernhard Eugen Fritsch is found guilty of one count of wire fraud and faces up to 20 years in prison, according to the US Department of Justice. The ju judge discovered that he was not guilty of a second wire fraud.
Fritsch remains a bond and is expected to appear at a ruling hearing in the coming months. His attorney did not immediately respond to a request for comment Friday.
From 2014 to 2017, Fritsch raised more than $20 million from investors at Starclub, a high-tech company based in Santa Monica, prosecutors say. He argued that it was to build an application called Starsite that would help celebrities and influencers monetize fame through sponsored social media ads.
Prosecutors say the big media companies and global investment banking companies have invited investors by telling them they have already put their money into his company. He claimed to have made $15 million in revenue in 2015.
But none of these statements were true, prosecutors said — nor did he promise to put their money into his tech company.
“Instead, Fritche used much of the investor’s money to purchase luxury cars such as McLaren and Rolls-Royce, secured the yacht and enriched himself and supported a luxurious lifestyle, including renovating the Malibu mansion near Carbon Beach,” the Justice Department said in a statement.
Prosecutors estimate that those caught up in the scheme lost around $25 million. One investor has donated more than $20 million and introduced Fritsch to others who gave millions more, prosecutors said.
Law enforcement seized yachts and luxury vehicles.
In addition to the federal trial, Fritsch was sued three times in LA County Superior Court for fraudulent financial planning claims.
Records industry executive HAQQ Islam and his company sued Starclub and Fritsch in 2013, alleging contact and fraud violations. Islam claimed that Fritsch owed him $750,000 to get celebrities such as Jessica Simpson to meet Fritsch and consider joining Starclub’s business venture, according to a report by Courthouse News Service.
Then in 2017, Eugene McBurney and Bermuda-based hedge fund Harrington Global Chance, both Starclub investors, sued Fritsch over allegations of breach of contract and fraud, court records show.
The lawsuit alleges that Starclub employees “earned more than $35 million in cash from investors on the basis of false statements, presenting the social media company as the “next big thing.”
Fritche was sued last year by Mark Montgomery. He claims that his cousin Fritche owes him more than $593,000 in loans and what Fritsch used to cover his mortgage, car payments and utilities. This case is still pending.
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