Defendant also Sentenced for Aggravated Identity Theft, Money Laundering, a Firearm Offense, and a Narcotics Offense
Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that LISA BERSHAN was sentenced to 7 years in prison on Friday, November 22 by U.S. District Judge Jed S. Rakoff for participating in two schemes to defraud more than 50 investors in the Starship Snacks Corporation and the All American Pet Company of more than $2.9 million, by making false and fraudulent representations about, among other things, the status of the companies’ products, guarantees that purportedly backed the investments, and the interest of large multi-national corporations in acquiring the companies. BERSHAN was also sentenced for using the stolen identities of three individuals to commit the All American Pet Company scheme, money laundering, illegally receiving a firearm in New York without the proper licenses, and conspiracy to distribute and to possess with the intent to distribute cocaine.
U.S. Attorney Geoffrey Berman said: “Lisa Bershan defrauded more than 50 investors of more than $2.9 million by making materially false representations about the snack and pet food companies she purportedly ran. As part of her schemes, she and her co-conspirators used other people’s identities and created a slew of falsified documents to lure their victims. When victims poured money into purported business bank accounts Bershan controlled, she used those bank accounts as her personal piggy bank, spending the money to finance her lavish lifestyle of luxury real estate, jewelry, plastic surgery, and clothing. But Bershan’s crimes didn’t end with fraud. She also pled guilty to and was sentenced for serious firearms and narcotics distribution offenses. Lisa Bershan’s crime spree has come to an end, and she now faces a significant prison term for her crimes.”
According to the allegations contained in the superseding Information filed against LISA BERSHAN and statements made in related court filings and proceedings, including the trial of co-defendant Joel Margulies:
The All American Pet Company Fraud Scheme
From October 2013 through May 2017, BERSHAN, Joel Margulies, and a co-conspirator raised more than $575,000 in purported loans for the All American Pet Company (“AAPT”), a penny-stock company that produced, marketed, and sold food bars and other products for dogs, based on the following misrepresentations, among others: (a) that the Internal Revenue Service (“IRS”) had accepted an “offer in compromise” from AAPT that significantly reduced the back taxes AAPT owed to the IRS; (b) that BERSHAN had paid to the IRS the amount of this offer in compromise and had thus absolved AAPT of its outstanding tax liability; (c) that BERSHAN was the beneficial owner of a bank account containing over $6.9 million; (d) that BERSHAN would personally guarantee some of the loans; and (e) that Nestlé USA had proposed various business deals with AAPT. BERSHAN held herself out as president and chief executive officer of AAPT at various times.
Although BERSHAN and her co-conspirators had promised investors that they would use the loans to help improve AAPT’s manufacturing and distribution capacities, the conspirators instead used those funds largely for their personal expenses, including the rental of a luxury villa in the Bel Air neighborhood of Los Angeles where all three of them lived.
In connection with the AAPT fraud scheme, BERSHAN used the stolen identities of three individuals – an IRS employee, a Nestlé Purina employee, and a Manhattan attorney – to create false and fraudulent letters that were sent to AAPT investors to induce them to make loans to AAPT.
The Starship Snack Corporation Fraud Scheme
From approximately August 2015 through August 2017, BERSHAN, Margulies, and a co-conspirator, Barry Schwartz, raised more than $2.3 million from investors in a company originally called the Awake Company and later renamed Starship Snacks Corporation (“Starship”), which purported to be in the business of developing and manufacturing caffeinated snack products, based on the following misrepresentations, among others: (a) that investments in Starship were guaranteed against losses by BERSHAN; (b) that Starship was going to be acquired by Monster Beverage (“Monster”) in a one-for-one stock exchange; (c) that Starship was engaged in actual product development and had procured samples of candies infused with caffeine; (d) that BERSHAN and others at Starship had entered into non-disclosure agreements with Monster that prohibited them from discussing Starship’s purported acquisition by Monster and its purported product development. BERSHAN held herself out as the chief executive officer, president, and founder of Starship.
After receiving funds from Starship investors, BERSHAN and her co-conspirators used those funds to maintain their own extravagant lifestyles, spending hundreds of thousands of dollars on things like luxury clothing, plastic surgery, interior decorating, the rental of a high-end apartment in New York City, and the down payment for a multimillion-dollar house in Florida.
Money Laundering, Illegal Receipt of a Firearm, and Distribution of Narcotics
In addition to the fraud and identity theft charges set forth above, BERSHAN was sentenced for money laundering in connection with the AAPT and Starship schemes. She was also sentenced for illegally receiving a firearm and ammunition in New York that her co-conspirator, Margulies, sent to her from Tennessee via commercial courier. Neither BERSHAN nor Margulies held federal firearms licenses that would have allowed them to effect such a transfer legally. Finally, BERSHAN was also sentenced for conspiring to distribute cocaine from October 2015 through August 2017, during which conspiracy BERSHAN caused quantities of cocaine to be sent to her and Margulies via commercial courier in interstate commerce.
In addition to the prison term, BERSHAN, 62, was sentenced to five years of supervised release. BERSHAN was also ordered to forfeit $2,926,702.54 and to make restitution in the amount of $2,926,702.54.
Barry Schwartz previously pled guilty and is scheduled to be sentenced before Judge Rakoff on December 12, 2019. Margulies was convicted following a seven-day jury trial before Judge Rakoff and is scheduled to be sentenced on December 16, 2019.
Mr. Berman praised the work of the Federal Bureau of Investigation, and thanked the Securities and Exchange Commission for its assistance.
