By Jonathan Stempel

NEW YORK (Reuters) – A southern California company that sells beer, wine and bottled water targeting female customers has been sued by the U.S. Securities and Exchange Commission for allegedly defrauding investors out of millions of dollars.

SEC claimed that SHE Beverage Co raised $15 million through unregistered stock sale transactions from 2017 to 2019. This was in a lawsuit filed Tuesday.

SEC claimed the Lancaster, California-based firm overstated revenues, used 2% instead of 30% for beverage inventory and falsely claimed it was the recipient of takeover offers of up to $500,000,000.

According to the SEC, Lupe Rose, Chief Executive, Sonja Shelby, Chief Financial Officer, and Katherine Dirden, Chief Operations Officer, had misappropriated at most $7.5million from investors. The $1.2million was spent on casinos as well, along with other sums used for luxury goods, cars, trucks, and home lease payments.

Jonathan Bletzacker (a lawyer representing the company’s executives) said Wednesday that he had reviewed the complaint. He also stated, “We look forward to rectifying the record and proving the allegations are incorrect in open court.”

SHE was established in 2015. This is six years since its co-founders, Rose (52), and Shelby (58), both from Palmdale, California.

SHE’s website calls the company “celebrity-driven” and offers water products that are designed for a “health conscious” customer.

In Los Angeles, the SEC lawsuit seeks civil penalties, the recovery of ill-gotten profits, as well as bans for individual defendants.

SEC v SHE Beverage Co. U.S. District Court Central District of California. No. 21-07339.