A man from Malibu has been convicted by a jury for defrauding investors of over $20 million by making false claims about his company's financial performance related to a software application designed for celebrities and social media influencers. The announcement was made by the Justice Department.
Bernhard Eugen Fritsch, aged 63, was found guilty of one count of wire fraud late Thursday.
Evidence presented during a nine-day trial revealed that Fritsch, the founder and CEO of StarClub Inc., a tech company based in Santa Monica, raised more than $20 million from investors between 2014 and 2017. The funds were supposedly for developing the company’s app, StarSite, which Fritsch claimed would allow celebrities and influencers to use the technology for social media content, and share ad revenue through advertising content delivered by the app.
While offering StarClub to investors, Fritsch made multiple false claims. He purported that StarClub was close to securing commercial deals, investments, or buyout offers from major media companies like Disney. He also claimed that StarClub had reported $15 million in revenue in 2015, and that its current investors included significant media companies and a global investment banking firm.
Fritsch promised the investor money would go towards expanding StarClub’s channels and technology, along with general corporate purposes. However, much of the money was reportedly used for personal enrichment and supporting his extravagant lifestyle. These expenditures included purchasing luxury vehicles such as a McLaren and a Rolls-Royce, renovation of his yacht, and improvements to his Malibu mansion near Carbon Beach.
Law enforcement has seized the yacht, the McLaren, and the Rolls-Royce, and they are pending forfeiture proceedings.
One particular victim was misled into investing over $20 million in StarClub over two years based on Fritsch’s fabrications, further introducing him to other investors who also spent millions on the company. Prosecutors estimate the scheme resulted in at least approximately $25 million in victim losses.
Fritsch was acquitted of a second count of wire fraud and remains free on bond.
United States District Judge Dale S. Fischer is expected to schedule a sentencing hearing in the coming months. Fritsch faces a statutory maximum sentence of 20 years in federal prison.
The FBI conducted the investigation into this matter.
The case is being prosecuted by Assistant United States Attorneys Monica E. Tait, Sarah S. Lee, and Joseph L. De Leon from the Major Frauds Section.