Malibu Man Found Guilty of Defrauding Investors Out of Over $20 Million via False Claims about Celebrity App’s Business Performance

LOS ANGELES – A Malibu man has been found guilty by a jury of defrauding investors out of more than $20 million by lying to them about his technology company’s financial performance related to a software application designed to help celebrities and social media influencers monetize their brand endorsements, the Justice Department announced today.

Bernhard Eugen Fritsch, 63, was found guilty late Thursday of one count of wire fraud.

According to evidence presented at a nine-day trial, Fritsch was the founder and CEO of StarClub Inc., a Santa Monica-based tech company. From 2014 to 2017, Fritsch raised more than $20 million from investors to build out the company’s app, also known as StarSite, claiming celebrities and influencers would use the technology to post content on social media sites such as Facebook. At the same time, the app would deliver advertising content and share ad revenue with the celebrity poster.

While pitching the StarClub offering to investors, Fritsch made several false and fraudulent claims, including that StarClub was on the verge of entering commercial deals with, or obtaining investments and buyout offers from major media companies such as Disney; that StarClub had earned $15 million in revenue in 2015; and that StarClub’s current investors included major media companies and a global investment banking firm. 

Fritsch also claimed he would use the investors’ money to build out StarClub’s channels and technology and for general corporate purposes. Instead, Fritsch used much of the investor money to enrich himself and support his luxurious lifestyle, including by purchasing luxury cars such as a McLaren and a Rolls-Royce, fixing up his yacht, and renovating his Malibu mansion, located near Carbon Beach. 

Law enforcement seized the yacht, McLaren, and the Rolls-Royce and they are subject to forfeiture proceedings.

One victim invested more than $20 million in StarClub over the course of two years, based on Fritsch’s false statements. This victim also introduced Fritsch to other victims who invested millions of additional funds in the company. Prosecutors estimate that Fritsch caused at least approximately $25 million in victim losses because of his scheme.

The jury found Fritsch not guilty of a second wire fraud count. He remains free on bond.

United States District Judge Dale S. Fischer is expected to schedule a sentencing hearing to occur in the coming months. Fritsch faces a statutory maximum sentence of 20 years in federal prison.

The FBI investigated this matter.

Assistant United States Attorneys Monica E. Tait, Sarah S. Lee, and Joseph L. De Leon of the Major Frauds Section are prosecuting this case.