Securities and Exchange Commission v. SHE Beverage Company, Inc.

COMPLAINT
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AMY JANE LONGO (Cal. Bar No. 198304)
Email:   [email protected]
JANET RICH WEISSMAN (Cal. Bar No. 137023)
Email:   [email protected]
Attorneys for Plaintiff
Securities and Exchange Commission
Michele Wein Layne, Regional Director
Alka N. Patel, Associate Regional Director
444 S. Flower Street, Suite 900
Los Angeles, California 90071
Telephone: (323) 965-3998
Facsimile:  (213) 443-1904
UNITED STATES  DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
SECURITIES AND EXCHANGE
COMMISSION,
Plaintiff,
vs.
SHE BEVERAGE COMPANY, INC.,
LUPE L. ROSE, SONJA F. SHELBY
AND KATHERINE E. DIRDEN,
Defendants.
Case No.
COMPLAINT
Plaintiff Securities and Exchange Commission (“SEC”) alleges:
JURISDICTION AND VENUE
1.The Court has jurisdiction over this action pursuant to Sections 20(b),
20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§
77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the
2:21-cv-7339

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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1),
78u(d)(3)(A), 78u(e) & 78aa(a).
2. Defendants have, directly or indirectly, made use of the means or
instrumentalities of interstate commerce, of the mails, or of the facilities of a national
securities exchange in connection with the transactions, acts, practices and courses of
business alleged  in this complaint.
3. Venue is proper in this district pursuant to Section 22(a) of the Securities
Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a),
because certain of the transactions, acts, practices and courses of conduct constituting
violations of the federal securities laws occurred within this district.  In addition,
venue is proper in this district because Defendants Lupe Rose, Sonja Shelby and
Katherine Dirden reside in this district, and Defendant SHE Beverage Company, Inc.
has its principal place of business in this district.
SUMMARY
4. This civil  enforcement action involves an offering fraud perpetrated by
Defendants SHE Beverage Company, Inc. (“SHE Beverage”) and its principals  Lupe
L. Rose, Sonja F. Shelby and Katherine E. Dirden.  Located in Lancaster, California,
SHE Beverage produces beverages targeting female customers.  Between 2017 and
2019, SHE Beverage raised over $15 million  from unregistered stock sales to more
than 2,000 investors from across the country.  SHE Beverage and its principals
falsely represented to investors that they would use 30% of the offering proceeds to
purchase beverage inventory.  In fact, they spent only approximately 2% of the
monies they raised on beverages.  In the meantime, they misappropriated roughly half
the offering proceeds—at least $7.5 million—in  cash withdrawals and to pay personal
expenses such as cars and trucks, rent, luxury retail goods, and trips to casinos.
5. Defendants carried out their aggressive fund-raising by falsely
promoting the company as being successful in a variety of ways.  Defendants
overstated and mischaracterized the revenues earned by the company since its

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inception.  Defendants claimed the company had launched its own brewery, whereas
it had not even completed its construction.  They falsely touted the company’s bottled
water as “proprietary” and “FDA approved,” when it was neither.  Defendants
claimed the company had received acquisition offers in the hundreds of millions of
dollars; in reality, it had no such offers.  The principals claimed to have millions of
their own money invested in the company, whereas their investments were much
more modest.  They frequently represented that the company’s planned initial public
offering (“IPO”) was imminent, when they had not yet even filed  a registration
statement with the SEC.  They touted the acquisition of a cannabis-related company,
concealing that it was obtained from affiliates (sisters of one of the Defendants) with
no independent valuation, and had no operations or sales.
6. SHE Beverage’s fraudulent stock offering was not registered with the
SEC; thus investors lacked important information about the company’s financial
condition.  Defendants raised money from thousands of investors in numerous states,
including  from unaccredited investors.  The company engaged in general solicitation
over the internet and solicited investors to deposit by cash, checks, credit cards and
electronic payment processor, at times offering referral, two-for-one, and other
bonuses, and frequently hyping investors’ last chance to invest pre-IPO.  The only
Form S-1 registration statement ever filed by the Defendants, in January 2020, never
went effective and was declared abandoned in 2021.
7. By their conduct, Defendants violated Sections 5 and 17(a) of the
Securities Act, 15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a), and Section 10(b) of the
Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-
5(a)-(c).
8. The SEC seeks findings  that the Defendants committed these violations;
permanent injunctions, disgorgement with prejudgment interest, civil penalties, and
against Defendants Rose, Shelby, and Dirden, officer and director bars.

COMPLAINT
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THE DEFENDANTS
9. SHE Beverage Company, Inc. (“SHE Beverage”), is a California
corporation, which was incorporated in or about 2015, with its principal  place of
business in Lancaster, California.  SHE Beverage promotes itself primarily  as a
beverage company targeted at female consumers, along with several additional lines
of business.  SHE Beverage has never been registered with the SEC in any capacity,
has never had a class of securities registered with the SEC, and its securities have
never been publicly traded.  SHE Beverage is controlled by Defendants Rose, Shelby
and Dirden.
10. Lupe L. Rose (“Rose”), 52, lives in Palmdale, California and holds
herself out as SHE Beverage’s co-founder, owner, chief executive officer (“CEO”),
president and chair of the board of directors.  Rose has never been registered with the
SEC in any capacity and has never held any securities licenses.
11. Sonja F. Shelby (“Shelby”), 58, lives in Palmdale, California and holds
herself out as SHE Beverage’s co-founder, owner, vice president, treasurer, vice
chair, chief financial  officer (“CFO”), principal financial  officer, and member of the
board of directors.  Shelby has never been registered with the SEC in any capacity
and has never held any securities licenses.
12. Katherine E. Dirden (“Dirden”), 46, lives in Lancaster, California and
holds herself out as SHE Beverage’s chief operations officer (“COO”), investor
relations director, and a member of the board of directors.  Dirden has never been
registered with the Commission in any capacity and has never held any securities
licenses.
THE ALLEGATIONS
A. SHE Beverage and its Principals
13. Rose and Shelby co-founded and began working on the concept for SHE
Beverage in or around 2009; Rose subsequently incorporated SHE Beverage in or
about 2015.

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14. In or around February 2016, SHE Beverage hired Dirden as its COO.
15. SHE Beverage was promoted primarily as a women-owned beverage
manufacturer, selling beer and other brewed drinks, wine, and bottled water, aimed at
female consumers.
16. SHE Beverage’s offering documents identify Rose as the co-founder,
owner, chief executive officer, president and chair of the board of directors.
17. SHE Beverage’s offering documents identify Shelby as the co-founder,
owner, vice president, treasurer, vice chair, chief financial  officer, principal  financial
officer, and member of the board of directors.
18. SHE Beverage’s offering documents identify Dirden as the chief
operations officer, investor relations director, and a member of the board of directors.
19. As its most senior executive, Rose had ultimate decision-making
authority for SHE Beverage.  During the relevant period, Rose exercised day-to-day
control over SHE Beverage, including  meeting with beverage manufacturers,
purchasing inventory, and marketing and delivering product.  Along with Shelby and
Dirden, Rose was a member of SHE Beverage’s three-person executive team.
20. Although SHE Beverage identified  her as the CFO and treasurer,
Shelby’s primary responsibilities during the relevant period were for human resources
and other administrative duties.  Along  with Rose and Dirden, Shelby was a member
of SHE Beverage’s three-person executive team.
21. Dirden functioned as SHE Beverage’s chief operating officer, including
selling  product and taking care of internal reporting systems.  During the relevant
period, Dirden had primary responsibility for investor relations, including  answering
questions of prospective and actual investors about SHE Beverage’s offering.  Along
with Rose and Shelby, Dirden was a member of SHE Beverage’s three-person
executive team.
22. Rose, Shelby and Dirden are all signatories on the company’s bank
accounts.

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23. SHE Beverage’s website addresses during the relevant period included:
  http://www.shebeverages.com
and
 http://sheinvestmentguide.com.
24. During the relevant period, Defendants utilized the following  email
addresses:
 Rose: [email protected], [email protected],
 Shelby:  [email protected], [email protected],
[email protected],
and
 Dirden:  [email protected].
B. Defendants’ Offer and Sale of Securities
25. Between 2017 and 2019, SHE Beverage raised over $15 million  from
more than 2,000 investors nationwide.
26. SHE Beverage issued securities in the form of shares of SHE Beverage.
27. Investors purchased shares from SHE Beverage through a variety of
means, including cashier’s checks, personal checks, wires, credit cards, transactions
through PayPal, cash or by deposits directly into SHE Beverage’s bank account.
28. SHE Beverage offered and sold securities using  offering memoranda,
investment guides, its websites, emails, and verbal communications.
29. Between approximately October 2017 and mid-June 2018, SHE
Beverage offered and sold its shares through an offering memorandum (the “2017
OM”).
30. SHE Beverage utilized  an outside consultant to prepare the 2017 OM.
31. The 2017 OM offered shares of SHE Beverage’s common stock at $2.50
per share.
32. The 2017 OM included a cover letter and subscription agreement.  The
subscription agreement requested prospective investors to provide information as to

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their status as an accredited investor.
33.SHE Beverage provided the 2017 OM to prospective investors during in-
person meetings.
34.Beginning  in or about mid-June 2018, SHE Beverage offered and sold
stock to investors through a private placement memorandum dated June 20, 2018 (the
“2018 PPM”).
35.Rose, Shelby and Dirden worked with an outside consultant to prepare
the 2018 PPM.
36.The 2018 PPM offered up to $25 million  of SHE Beverage’s common
stock at $2.50 per share.
37.The 2018 PPM stated that the shares were exempt from registration
under Securities Act Sections 3(b), 4(2), and Rule 506 thereunder, and that
prospective investors were required to meet “suitability standards” set forth in the
2018 PPM.
38.SHE Beverage provided the 2018 PPM to prospective investors during
in-person meetings or by email.
39.Rose, Shelby and Dirden reviewed the 2018 PPM before it was provided
to investors, including  the disclosures on the use of proceeds.
40.SHE Beverage also solicited  investors using a 2018 SHE Beverage
Investment Guide and Corporate Update (the “2018 Investment Guide”).
41.Rose created the 2018 Investment Guide and it was distributed at
investor meetings along  with the 2018 PPM.
42.During SHE Beverage’s offering, the 2018 PPM and the 2018
Investment Guide were available on SHE Beverage’s websites.
43.The 2018 Investment Guide included a “New Member Welcome Letter”
signed by Rose, Shelby and Dirden.
44.SHE Beverage also solicited  investors using a 2019 SHE Brand
Beverage Investment Guide (the “2019 Investment Guide”).

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45. The 2019 Investment Guide was available on SHE Beverage’s website
from at least May 2019 to December 2019.
46. Rose assisted with the preparation of the 2019 Investment Guide, and
Rose and Dirden knew it was accessible on the company’s website.
47. SHE Beverage publicly  offered its securities to investors through its
websites through at least December 2019.
48. SHE Beverage’s website included a section titled “Why You Should
Invest In Our Beverage Company” with a link to two letters from Rose, Shelby and
Dirden.
49. The SHE Investment Guide website promoted that the company was
accepting investments and provided a link to the 2018 PPM.
50. Beginning  in or around December 2017 and throughout the offering,
SHE Beverage sent email  messages to existing  investors approximately once a
month.  The messages promoted additional investment in SHE Beverage and included
information about SHE Beverage’s securities offering.
51. The investor email  messages were formatted as letters to investors with
signatures variously from “the SHE Beverage Team” or individually  from Rose or
Dirden.
52. For example, in or around the end of December 2018, in an email to
investors signed “SHE Beverage Executive Team,” SHE Beverage promoted a
“Limited Time Offer” to purchase two for one shares, noting that Rose, Shelby and
Dirden wanted to “provide our current investors one final amazing opportunity” to
invest at this price, through early January 2019.
53. As another example, in one 2019 email signed by Rose, SHE Beverage
promoted a “new minimum level of investment of $1,000 at $2.50 per share...[for]
new and existing investors,” and that investors could “invest an ADDITIONAL
investment” of at least $1,000 to obtain a chance to win a free trip.
54. In another email dated on or about April  24, 2019, signed by Rose, SHE

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Beverage promoted the opportunity to “purchase at a discounted rate” and “refer
friends and family.”
55. In another email dated on or around November 10, 2019, signed by
Rose, SHE Beverage promoted the opportunity to invest $50,000 and receive
“advisory board shares,” stating, “can you imagine when we open larger or grow to
50 dollars a share?”
56. In another email dated in or around 2019, Dirden wrote that SHE
Beverage was “still  fund-raising during this process so please continue to send us
anybody interested in investing or if you’d like to add to you (sic) portfolio please
feel free to do so,” directing prospective investors to contact her with any questions.
57. Rose approved the investor messages for distribution, and Dirden sent
them out.
58. Between approximately 2018 and 2019, SHE Beverage hosted three to
four in-person investor meetings a year, attended by SHE Beverage’s principals and
prospective and actual investors.  Some investor meetings were streamed to out-of-
town investors.
59. With Shelby and Dirden in attendance, Rose ran the investor meetings
and presented at them.
60. At the investor meetings, SHE Beverage updated investors about the
business and provided its beverage products for sampling.
61. At the investor meetings, SHE Beverage made available  its offering
materials, including the 2018 PPM and the 2018 Investment Guide.
62. During SHE Beverage’s offering, Rose and Dirden each directly
solicited  investors.
63. For example, on or about August 6, 2018, Rose hosted a “meet & greet”
for new investors to discuss the Investment Guide.
64. Dirden spoke to prospective and actual investors to answer questions
about the offering, and was identified  as the person to contact with inquiries.

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65. Defendants initially solicited  friends and family to invest.
Subsequently, they began soliciting  friends and family of their investors, and engaged
in a general solicitation of investors for SHE Beverage’s offering.
66. SHE Beverage offered referral bonuses, in the form of additional shares,
for investors who brought in additional investors to SHE Beverage.
67. SHE Beverage’s offering was nationwide with more than 2,000 investors
who live in at least 38 states, and Guam, Puerto Rico, and Washington, D.C.
C. Defendants’ Fraudulent Scheme and Material Misrepresentations
and Omissions
68. SHE Beverage and its principals  engaged in a scheme to defraud and
made material misrepresentations and omissions to prospective and actual investors
during the offering.
69. SHE Beverage was the maker of the statements in its offering
memoranda, investment guides, websites, press releases, and investor emails.
70. As SHE Beverage’s principals with day-to-day control over its
operations and disclosures, Rose, Shelby, and Dirden were makers of the statements
in SHE Beverage’s offering memoranda, investment guides, websites, press releases,
and investor emails.
71. Rose, Shelby and Dirden each directly made and signed their names on
statements to investors, including  signing  the investment guides, signing  investor
emails as the executive team, and for Rose and Dirden, signing investor emails
individually.  Rose was also listed as the contact on SHE Beverage’s press releases.
1. Defendants’ misuse and misappropriation of investor proceeds
72. SHE Beverage and its principals  misused investor proceeds by utilizing
only 2% of investor funds to purchase beverage inventory, contrary to the disclosures
in SHE Beverage’s offering materials.
73. Additionally,  Defendants misappropriated investor funds by spending
millions  on personal expenses and cash withdrawals, far in excess of any disclosed

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amounts of salary or compensation to the principals.
74. SHE Beverage’s 2017 OM represented that the “proceeds of the offering
will be used for the Company’s Business Plan and management has retained
discretion to use the proceeds according to the Use of Proceeds of the Offering and
for other related uses.”
75. The 2017 OM did not include either a business plan or a use of proceeds
section, but described the business as “selling high quality beverages with a focus on
elite branding and brand management.”
76. SHE Beverage’s 2018 PPM included a use of proceeds section:

USE  OF PROCEEDS

Amount Item Percentage
$12,500,000 Working Capital/Operating  Expenses 50%
$7,500,000 Inventory 30%
$5,000,000 Sales, Marketing, Salaries 20%
$25,000,000 Total 100%

77. The 2018 PPM thus represented that approximately 30% of offering
proceeds, or approximately $4.5 million (representing 30% of the offering proceeds
actually raised), would be used on inventory.
78. During SHE Beverage’s offering, Defendants reiterated the intended
uses of investor proceeds in other documents provided to investors.
79. For example, the 2018 Investment Guide included descriptions of the
company and its beverage products, stating that the company would “create an elite
line  that will  not only dominate the Beverage Industry, but also change the way we
drink one SIP at a time.”  The 2018 Investment Guide further stated that “owner
funding and further investor generated cash flow will enable the expansion plan.”
80. Similarly, the 2019 Investment Guide featured descriptions of SHE
Beverage’s beverage products and explained that “the goal is to raise 1 billion dollars
to grow the brand.”
81. Contrary to its representations to investors, between 2015 and 2021,

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SHE Beverage spent only approximately $321,971 on beverage inventory, or
approximately 2% of the offering proceeds, as follows:
(a) from 2015 to 2019, SHE Beverage paid approximately $195,375
to three breweries to brew craft beer and hard punch for retail sale under the SHE
Beverage brand name;
(b) from 2018 to 2021, SHE Beverage paid approximately $71,550 to
a California distributor for its proprietary alkaline, electrolyte, purified and spring
bottled waters for retail sale under the SHE Beverage brand name;
(c) in or around 2019, SHE Beverage paid approximately $26,007 to
a Florida distributor for its CBD bottled water to sell under the SHE Beverage brand
name; and
(d) in or around 2019, SHE Beverage paid approximately $29,039 for
a Lancaster winery to create a private-label rosé wine.
82. Given the limited  amounts spent on beverage inventory during the
offering, Defendants’ representations that they would use 30% of investor proceeds
on inventory were materially false and misleading.
83. Defendants did not disclose to investors that their purchases of inventory
were materially  lower than the offering materials represented.
84. Reasonable investors would have found it important to their investment
decision to know that Defendants were not purchasing the amounts of inventory the
offering materials represented, which would necessarily impact the potential sales of
SHE Beverage product.
85. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that SHE Beverage was misusing  investor funds by not purchasing
beverage inventory consistent with their representations to investors.
86. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to SHE Beverage’s use of investor funds, by not purchasing beverage
inventory consistent with their representations to investors.

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87. Rose, Shelby and Dirden also misappropriated investor funds.
88. The 2017 OM did not disclose that any proceeds would be used for
executive compensation.
89. The 2018 PPM represented that approximately 20% of the offering
proceeds, or $3 million  (representing 20% of the $15 million  of offering proceeds
actually raised), would be used for sales, salaries and marketing.
90. However, between 2016 and 2021, Rose, Shelby and Dirden took out at
least $7.5 million  in investor proceeds, as follows:
(a) approximately $6 million  in cash withdrawals and transfers to
Rose, Shelby and Dirden’s personal bank accounts;
(b) approximately $1.2 million  spent at casinos;
(c) approximately $180,000 to purchase 8 cars and trucks for personal
use and for payment of a title loan on Shelby’s Porsche;
(d) approximately $100,000 in payments for the lease on the house
occupied by Rose and Shelby; and
(e) approximately $50,000 in purchases from luxury clothing retailers
such as Gucci and Louis Vuitton.
91. The amounts Rose, Shelby and Dirden received from the offering
proceeds materially exceeded the amount allocated for the entire company’s sales,
salary and marketing expenses in the 2018 PPM.
92. Investors were not told that SHE Beverage’s principals would use
investor money for their personal expenses.
93. Reasonable investors would have found it important to their investment
decision to know that SHE Beverage’s principals used roughly half of all  proceeds to
pay their personal expenses and for cash withdrawals.
94. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that they were misappropriating investor funds.
95. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable

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care as to their expenditures of investor funds.
2. Defendants falsely represented the amount of revenues earned
from product sales
96. The 2018 PPM represented that “[t]he Company is a relatively new
venture, which has generated approximately $4-5 million  dollars in revenue and has
an average profit margin of 40% across the span of its product lines.”
97. The product lines identified in the 2018 PPM were beer and bottled
water.
98. The PPM 2018 PPM did not identify events as a source of revenues.
99. The statement that the company had generated $4-5 million  dollars in
revenue was false.
100. As of the end of fiscal year 2018, SHE Beverage had sold less than
$263,000 of merchandise.
101. SHE Beverage’s audited financial statements, disclosed for the first time
to investors with the company’s January 2020 Form S-1 filed  with the SEC, stated
that the company had only the following  revenues as of December 31, 2017 and
December 31, 2018:
REVENUE Ye ar e nde d De c. 31, 2018 Ye ar e nde d De c. 31, 2017
Event revenue $1,628,875 $1,569,690
Merchandise revenue $110,324 $152,670
Total revenue $1,729,199 $1,722,360
102. The company did not have $4-5 million  in revenues in 2018, and of the
revenues it had, more than 90% was from event rentals, rather than any product sales.
103. Reasonable investors would have found it important to their investment
decision to know that SHE Beverage’s revenues did not approach the $4-5 million
described to investors, and that the revenues it did have came overwhelmingly from

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events.
104.  Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s statements of earned revenues were materially
overstated and omitted the source of the majority of the company’s revenues.
105. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to their statements of revenues purportedly earned by SHE Beverage.
3. Defendants falsely depicted the status of SHE Beverage’s
brewery
106. In or around 2018 through 2020, SHE Beverage falsely promoted to
prospective and actual investors that it had opened and was operating a brewery for
its alcoholic beverages.
107. For example, in or around October 2018, SHE Beverage sent an email
message to its existing  investors promoting the “grand opening” of its Lancaster
brewery.
108. As another example, on or about December 11, 2018, SHE Beverage
issued a press release titled “SHE Beverage Company, Inc. Announces Acquisitions,
Re-Brandings, and Public Offering.”
109. In the December 11, 2018 press release, SHE Beverage claimed that its
locations included “a brewery and manufacturing site.”
110. The December 11, 2018 press release also stated that:
SHE Beverage Company has grown its brand to
unbelievable heights within the last four years.  Opening its
10,000 square foot brewery in Lancaster CA...” (emphasis
added).
111. SHE Beverage repeated the description of its purported brewery in seven
additional press releases, from January 2019 through January 2020.
112. Additionally,  in press releases issued on or about January 22, 2019 and
March 26, 2019, SHE Beverage described itself as “the female-owned and operated

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craft beer brewery...” and the “female-owned and renowned craft beer brewery...”
113. The 2019 Investment Guide listed a brewery as among SHE Beverage’s
assets.
114. SHE Beverage’s Form S-1 filed in January 2020, however, revealed that
the company was “currently in process of constructing a brewery....”
115. Contrary to its representations, SHE Beverage has never had an
operational brewery.
116. The only beer SHE Beverage sold to consumers came from contract
brewers.
117. As of at least January 2021, SHE Beverage had not installed  the brewery
equipment it had purchased.
118. SHE Beverage had not, as of at least January 2021, completed the
construction of the brewery.
119. SHE Beverage had not, as of at least January 2021, obtained a certificate
of occupancy for the brewery.
120. Other than test batches, as of January 2021, SHE Beverage had not
brewed any beverages at the site of its planned brewery.
121. In January 2021, the California  Department of Alcoholic  Beverage
Control indefinitely  suspended SHE Beverage’s small beer manufacturer license
because, among other reasons, SHE Beverage had not engaged in commercial beer
manufacturing.
122. Reasonable investors would have found it important to their investment
decision to know that SHE Beverage’s brewery was not yet constructed, nor
operational.
123. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s statements regarding the status of its brewery were false
and misleading.
124. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable

COMPLAINT
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care as to SHE Beverage’s statements regarding the status of its purported brewery.
4. Defendants misrepresented the status of SHE Beverage’s
“proprietary” water formula
125. Defendants falsely represented in the 2018 PPM that SHE Beverage sold
bottled water made with a proprietary formula that cured cancer and spina bifida, had
other health benefits (for heart health, fertility, aging,  anxiety, PMS, and menopause)
and was approved by the FDA.
126. The 2018 Investment Guide also claimed that the company used a
“proprietary process [that] allow[ed it] to transform water from any source...”
127. Rose repeated these claims in a recorded investor meeting on or about
June 2, 2019.
128. Contrary to Defendants’ representations, the bottled water sold under the
SHE Beverage private label was not proprietary and was not FDA-approved.
129. Prior to 2017, SHE Beverage purchased bottled water and antioxidant
shots from a third party contractor, but neither product was sold to consumers.
130. After 2017, SHE Beverage purchased bottled water from third party
distributors, to sell  as SHE Beverage-branded product.
131. SHE Beverage did not make and sell its own proprietary water, but
purchased commercially available bottled water from distributors for resale.
132. SHE Beverage’s bottled water has never had FDA approval.
133. Reasonable investors would have found it important to their investment
decision to know that SHE Beverage’s water was not proprietary and did not have
FDA approval.
134. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s statements regarding the nature and status of its bottled
water were false and misleading.
135. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to their statements regarding the nature and status of SHE Beverage’s bottled

COMPLAINT
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water.
5. Defendants misrepresented the acquisition offers received for
SHE Beverage
136. In or around 2018, SHE Beverage represented to investors that it had
received acquisition offers ranging  from $120 million  to $500 million.
137. For example, the 2018 Investment Guide stated:  “Alongside SHE
Beverage Company’s current growth, and public attention we know based upon
recent offers to buy our brand (which range from 120 Million  to 500 Million)  that
SHE Beverage Company’s ‘Public Announcement’ will deliver the expectation to
catapult our stock to a billion-dollar offer.”
138. On or about June 2, 2019, Rose touted the acquisition offers at a
recorded investor meeting, identifying  the $120 million  offer as coming from a global
spirits company (“Beverage Company A”) and the $500 million offer as coming from
a multilevel marketing company (“Network Marketing Company B”).
139. Defendants’ statements concerning the purported offers to acquire SHE
Beverage were false.
140. Beverage Company A never made an offer or engaged in substantive
negotiations to acquire SHE Beverage.
141. Network Marketing Company B has no record of any association or
communication with SHE Beverage, including  of any offer to acquire SHE Beverage.
142. Reasonable investors would have found it important to their investment
decision to know that SHE Beverages had not received offers in the hundreds of
millions  of dollars from these two companies.
143. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s statements regarding acquisition offers received for
SHE Beverage were false or misleading.
144. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to SHE Beverage’s statements regarding purported acquisition offers.

COMPLAINT
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6. Defendants overstated the principals’ investments in the
business
145. The 2019 Investment Guide stated that Rose, Shelby and Dirden had
“personally invested [$]3.7 [m]illion foundational capital to create the brand, refine
its packaging, build a trusted distribution network, and gain first-hand exposure to
several industry barriers that routinely blind-side new brands.”
146. SHE Beverage records show that Rose, Shelby and Dirden invested less
than $200,000.
147. Reasonable investors would have found it important to their investment
decision to know that the principals  had substantially less money invested in the
business as their “skin in the game.”
148. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that they were overstating the amount of their personal financial  investment
in the company.
149. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care with respect to statements of their personal financial  investment in the company.
7. Defendants falsely portrayed the imminence of the company’s
planned initial public offering
150. During the offering, SHE Beverage made a series of materially
misleading statements regarding the company’s planned IPO, encouraging existing
investors to invest additional monies while the company was still “pre-IPO” and the
share price was $2.50 per share.  Defendants encouraged investors to purchase shares
right away, stating that the stock price would be higher after the IPO.
151. Defendants repeatedly created the false appearance that the company’s
IPO was imminent, variously, within days, weeks or months, as a means to encourage
prospective or actual investors to invest their monies.
152. For example, on or about February 8, 2018, in an email  to investors
signed by Rose, SHE Beverage stated that investors who invested “within the next

COMPLAINT
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week or so will have the registered shares through the SEC.”
153. As another example, in or about October 2018, in a “notice to
shareholders,” SHE Beverage told investors the “IPO will open at $15.00, that’s
right! $15...,” encouraging existing shareholders to buy stock at $2.50/share and refer
friends and family to purchase at $5.00/share.
154. As another example, on or about March 26, 2019, SHE Beverage issued
a press release stating that it was “[d]ays away from its public offering.”
155. As another example, on or about April  24, 2019, a SHE Beverage email
to investors, signed by Rose, stated that the company was “days away from ringing
that bell.”
156. As another example, on or about May 14, 2019, a SHE Beverage email
to investors stated that “market opening day” was “drawing near,” and that investors
had their “final opportunity” to purchase shares at $2.50 per share.
157. On or about August 1, 2019, SHE Beverage again announced in a press
release that it was “days away from going public and qualifying for NASDAQ.”
158. It was not until  on or about January 2020, that SHE Beverage first filed a
Form S-1 registration statement with the SEC for an initial  public offering.
159. The audited financial statements filed with SHE Beverage’s Form S-1 on
January 2020 only covered the fiscal years 2017 and 2018; the company did not file
any audited financial statements for its fiscal year 2019.
160. Reasonable investors would have found it important to their investment
decision to know that SHE Beverage’s IPO was not as imminent as described.
161. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s statements regarding the imminence of the company’s
anticipated IPO were false and misleading.
162. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to SHE Beverage’s statements regarding its purportedly imminent IPO.

COMPLAINT
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8. Defendants falsely portrayed SHE Beverage’s acquisition of
Elite Green
163. On or about September 9, 2018, SHE Beverage acquired Elite Green
Solutions (“Elite Green”), a cannabis-related product company, for a combination of
cash and stock.
164. On or about December 11, 2018, SHE Beverage issued a press release
detailing its “incredible advancements,” including SHE Beverage’s acquisition of
Elite Green, stating that the company had been “rebranded” as “The Pink Leaf.”
165. SHE Beverage also promoted the Elite Green acquisition in investor
emails.
166. For example, in an email to investors on or about 2019 signed by Rose
soliciting  additional investments in SHE Beverage, the company touted its plans for
Elite Green (re-branded as the Pink Leaf), stating that it “recently hired its growers”
for a cannabis grow farm and that it “will begin manufacturing CBD, THC, and
Cannabis Products.”
167. At the time it was acquired, Elite Green did not have any cannabis
licenses or growing facilities  and had not sold any product.
168. SHE Beverage did not obtain an independent valuation of Elite Green
before acquiring  it.
169. The 2018 PPM stated that the company is “not expected to have
significant  dealings  with affiliates.”
170. Prior to its acquisition by SHE Beverage, Elite Green was owned by
Shelby’s sisters.
171. SHE Beverage’s Form S-1 filed in January 2020 revealed that the Elite
Green subsidiary, subsequently renamed “Pink Leaf by SHE,” as of 2020, had “no
assets or operations, other than capitalized product formulations purchased by the
Company.”
172. Defendants failed to disclose to SHE Beverage investors that Elite Green

COMPLAINT
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had no revenues, no licenses to sell  cannabis and that it was acquired from related
parties without any independent valuation.
173. Reasonable investors would have found it important to their investment
decisions to know that SHE Beverage’s acquisition had no business operations and
had not been independently valued prior to its acquisition, as well  as that Elite  Green
was acquired from related parties.
174. Defendants Rose, Shelby and Dirden knew, or were reckless in not
knowing, that the company’s disclosures regarding SHE Beverage’s acquisition of
Elite Green were false and misleading.
175. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable
care as to SHE Beverage’s disclosures regarding its acquisition of Elite Green.
D. SHE Beverage’s Form S-1 Filing
176. On or about January 2020, SHE Beverage filed  a Form S-1 registration
statement with the SEC for an initial  public offering.
177. The S-1 offered approximately 6.8 million  shares at $15 per share.
178. Rose, Shelby and Dirden signed the Form S-1 on behalf of SHE
Beverage.
179. Rose, Shelby and Dirden assisted in preparation of the Form S-1 and
reviewed it before it was filed  with the SEC.
180. Rose, Shelby and Dirden signed a management representation letter to
SHE Beverage’s outside auditor for purposes of the financial statements.
181. The Form S-1 filing  was the first time that SHE Beverage made its
audited financial statements available to investors.
182. In or about February 2021, the SEC issued an order declaring the
registration statement abandoned.
E. Defendants Acted with Scienter and Failed to Exercise Reasonable
Care
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COMPLAINT
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exercise reasonable care.
184. Rose was SHE Beverage’s most senior executive and had ultimate
decision-making authority for SHE Beverage.  She reviewed the disclosures made to
investors during the offering and/or signed her name to them, including  the offering
memoranda, the investment guides, press releases, investor emails, and the
company’s Form S-1.  She spoke at investor meetings and directly solicited SHE
Beverage’s investors during the offering.  She worked directly with the consultant
who assisted in the preparation of SHE Beverage’s offering materials.
185. Shelby was held out as SHE Beverage’s most senior financial officer.
She reviewed the disclosures made to investors during the offering and/or signed  her
name to them, including the offering memoranda, the investment guides, and the
company’s Form S-1.  She signed SHE Beverage investor emails as a member of
SHE Beverage’s executive team.  She attended investor meetings where offering
materials were provided.  She worked directly with the consultant who assisted in the
preparation of SHE Beverage’s offering materials.
186. Dirden was SHE Beverage’s point of contact for SHE Beverage’s
investor relations. She reviewed the disclosures made to investors during the offering
and signed her name to them, including  the offering memoranda, the investment
guides, investor emails, and the company’s Form S-1.  She attended investor
meetings where offering materials were provided, and directly solicited SHE
Beverage’s investors during the offering.  She worked directly with the consultant
who assisted in the preparation of SHE Beverage’s offering materials.
187. Rose, Shelby and Dirden each had access to and control over SHE
Beverage’s bank accounts.
188. Because Rose, Shelby and Dirden were SHE Beverage’s principals, their
scienter and failure to exercise reasonable care are imputed to SHE Beverage.
F. Defendants’ Registration Violations
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COMPLAINT
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exemption from registration applied to the offering.
190. SHE Beverage’s 2017 OM and 2018 PPM asked prospective investors to
attest that they were accredited investors.
191. Defendants did not take steps to verify prospective investors’ financial
sophistication or whether they were accredited investors.
192. SHE Beverage engaged in a general solicitation  for investors.
193. SHE Beverage’s offering included investors across numerous states.
194. SHE Beverage’s investors included investors who were not accredited
investors.
195. Defendants did not provide prospective investors with detailed financial
information about the offering prior to their investments.
196. As the issuer of its shares, SHE Beverage offered and sold securities to
prospective and actual investors.
197. Rose, Shelby and Dirden directly offered and sold SHE Beverage
securities.  Each communicated with investors concerning the offering, individually
or as a member of the company’s three-person executive team, by email, in-person, or
by phone, and/or attended investor meetings where prospective and actual investors
were provided SHE Beverage’s offering materials.
198. Rose, Shelby and Dirden indirectly  offered and sold SHE Beverage
securities.  Each was a substantial factor and a necessary participant in the SHE
Beverage stock sales.
FIRST CLAIM FOR RELIEF
Fraud in the Connection with the Purchase and Sale of Securities
Violations of Section 10(b) of the Exchange Act and Rule 10b-5
(against all Defendants)
199. The SEC realleges  and incorporates by reference paragraphs 1 through
198 above.
200. Defendants SHE Beverage, Rose, Shelby and Dirden carried out a

COMPLAINT
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fraudulent offering and made material misrepresentations and omissions to
prospective and actual investors.  Touting SHE Beverage as a successful beverage
company, Defendants concealed that minimal funds were spent to purchase
inventory, while Rose, Shelby and Dirden funneled investor monies to their personal
expenses and withdrew it in cash.  Defendants overstated and mischaracterized the
company’s revenues and their own investments in the company; advertised offers to
buy the company they had never received; and falsely portrayed the company’s
products and the imminence of its IPO, all in an effort to continue bringing  in
investor monies that they spent in ways that were never disclosed to investors.
201. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden, and each of them, have, directly or indirectly, in connection
with the purchase or sale of a security, by the use of means or instrumentalities of
interstate commerce, of the mails, or of the facilities  of a national securities
exchange:  (a) employed devices, schemes, or artifices to defraud; (b) made untrue
statements of a material fact or omitted to state a material fact necessary in order to
make the statements made, in the light  of the circumstances under which they were
made, not misleading;  and (c) engaged in acts, practices, or courses of business which
operated or would operate as a fraud or deceit upon other persons.
202. Defendants SHE Beverage, Rose, Shelby and Dirden have, with scienter,
employed devices, schemes and artifices to defraud; made untrue statements of a
material fact or omitted to state a material fact necessary in order to make the
statements made, in the light  of the circumstances under which they were made, not
misleading;  and engaged in acts, practices or courses of conduct that operated as a
fraud on the investing public  by the conduct described in detail  above.
203. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden have violated, and unless restrained and enjoined will
continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules
10b-5(a), 10b-5(b), and 10b-5(c) thereunder, 17 C.F.R. §§ 240.10b-5(a), 240.10b-5(b)

COMPLAINT
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& 240.10b-5(c).
SECOND CLAIM FOR RELIEF
Fraud in the Offer or Sale of Securities
Violations of Section 17(a) of the Securities Act
(against all Defendants)
204. The SEC realleges  and incorporates by reference paragraphs 1 through
198 above.
205. Defendants SHE Beverage, Rose, Shelby and Dirden carried out a
fraudulent offering and made material misrepresentations and omissions to
prospective and actual investors.  Touting SHE Beverage as a successful beverage
company, Defendants concealed that minimal funds were spent to purchase
inventory, while Rose, Shelby and Dirden funneled investor monies to their personal
expenses and withdrew it in cash.  Defendants overstated and mischaracterized the
company’s revenues and their own investments in the company; advertised offers to
buy the company they had never received; and falsely portrayed the company’s
products and the imminence of its IPO, all in an effort to continue bringing  in
investor monies that they spent in ways that were never disclosed to investors.
206. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden, and each of them, have, directly or indirectly, in the offer
or sale of securities, and by the use of means or instruments of transportation or
communication in interstate commerce or by use of the mails  directly or indirectly:
(a) employed devices, schemes, or artifices to defraud; (b) obtained money or
property by means of untrue statements of a material fact or by omitting  to state a
material fact necessary in order to make the statements made, in light  of the
circumstances under which they were made, not misleading;  and (c) engaged in
transactions, practices, or courses of business which operated or would operate as a
fraud or deceit upon the purchaser.
207. Defendants SHE Beverage, Rose, Shelby and Dirden, with scienter,

COMPLAINT
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employed devices, schemes and artifices to defraud; with scienter or negligence,
obtained money or property by means of untrue statements of a material fact or by
omitting  to state a material fact necessary in order to make the statements made, in
light  of the circumstances under which they were made, not misleading;  and, with
scienter or negligence, engaged in transactions, practices, or courses of business
which operated or would operate as a fraud or deceit upon the purchaser.
208. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden have violated, and unless restrained and enjoined will
continue to violate, Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15
U.S.C. §§ 77q(a)(1), 77q(a)(2), & 77q(a)(3).
THIRD CLAIM FOR RELIEF
Unregistered Offer and Sale of Securities
Violations of Sections 5(a) and 5(c) of the Securities Act
(against all Defendants)
209. The SEC realleges  and incorporates by reference paragraphs 1 through
198 above.
210. Defendants’ offers and sale of SHE Beverage’s stock were never
registered with the SEC, nor were they subject to any exemption from registration.
Defendants engaged in a nationwide offering using general solicitation;  sold to
unaccredited investors; and took no steps to verify the sophistication or accreditation
status of prospective investors.  Defendants directly offered and sold SHE Beverage’s
stock and Defendants Rose, Shelby and Dirden also indirectly offered and sold the
company’s stock, as each was a necessary participant and a substantial factor in the
company’s millions of dollars in stock sales to its thousands of investors.
211. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden, and each of them, directly or indirectly, singly and in
concert with others, have made use of the means or instruments of transportation or
communication in interstate commerce, or of the mails, to offer to sell  or to sell

COMPLAINT
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securities, or carried or caused to be carried through the mails or in interstate
commerce, by means or instruments of transportation, securities for the purpose of
sale or for delivery after sale, when no registration statement had been filed  or was in
effect as to such securities, and when no exemption from registration was applicable.
212. By engaging  in the conduct described above, Defendants SHE Beverage,
Rose, Shelby and Dirden have violated, and unless restrained and enjoined, are
reasonably likely  to continue to violate, Sections 5(a) and 5(c), 15 U.S.C. §§ 77e(a) &
77e(c).
PRAYER FOR RELIEF
WHEREFORE, the SEC respectfully requests that the Court:
I.
Issue findings  of fact and conclusions of law that Defendants committed the
alleged  violations.
II.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil  Procedure, permanently enjoining Defendants SHE Beverage, Rose, Shelby and
Dirden, and their officers, agents, servants, employees and attorneys, and those
persons in active concert or participation with any of them, who receive actual notice
of the judgment by personal service or otherwise, and each of them, from violating
Securities Act Section 17(a) [15 U.S.C. §77q(a)], and Exchange Act Section 10(b)
[15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].
III.
Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of
Civil  Procedure, permanently enjoining Defendants SHE Beverage, Rose, Shelby and
Dirden, and their officers, agents, servants, employees and attorneys, and those
persons in active concert or participation with any of them, who receive actual notice
of the judgment by personal service or otherwise, and each of them, from violating
Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)].

COMPLAINT
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IV.
Order Defendants to disgorge  all  funds received from their illegal  conduct,
together with prejudgment interest thereon.
V.
Order Defendants to pay civil  penalties under Section 20(d) of the Securities
Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. §
78u(d)(3)].
VI.
Enter an order against Defendants Rose, Shelby and Dirden, pursuant to
Sections 20(e) of the Securities Act, 15 U.S.C. § 77t(e) and Sections 2l(d)(2) of the
Exchange Act, 15 U.S.C. § 78u(d)(2), prohibiting each of them from acting as an
officer or director of any issuer that has a class of securities registered pursuant to
Section 12 of the Exchange Act, 15 U.S.C. § 781 or that is required to file  reports
pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d).
VII.
Retain jurisdiction of this action in accordance with the principles  of equity and
the Federal Rules of Civil  Procedure in order to implement and carry out the terms of
all  orders and decrees that may be entered, or to entertain any suitable application or
motion for additional relief within the jurisdiction of this Court.
VIII.
Grant such other and further relief as this Court may determine to be just and
necessary.
Dated:  September 14, 2021
/s/ Amy Jane Longo
Amy Jane Longo
Janet Rich Weissman
Attorneys for Plaintiff
Securities and Exchange Commission

COMPLAINT 1 

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AMY JANE LONGO (Cal. Bar No. 198304) 
Email:  [email protected] 
JANET RICH WEISSMAN (Cal. Bar No. 137023) 
Email:  [email protected] 

Attorneys for Plaintiff 

Securities and Exchange Commission 
Michele Wein Layne, Regional Director 
Alka N. Patel, Associate Regional Director 
444 S. Flower Street, Suite 900 
Los Angeles, California 90071 
Telephone: (323) 965-3998 
Facsimile: (213) 443-1904 

UNITED STATES DISTRICT COURT 

CENTRAL DISTRICT OF CALIFORNIA 

SECURITIES AND EXCHANGE 
COMMISSION, 

Plaintiff, 

vs. 

SHE BEVERAGE COMPANY, INC., 

LUPE L. ROSE, SONJA F. SHELBY 
AND KATHERINE E. DIRDEN, 

Defendants. 

Case No. 

COMPLAINT 

Plaintiff Securities and Exchange Commission (“SEC”) alleges: 

JURISDICTION AND VENUE 

1. The Court has jurisdiction over this action pursuant to Sections 20(b),

20(d)(1) and 22(a) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C. §§ 

77t(b), 77t(d)(1) & 77v(a), and Sections 21(d)(1), 21(d)(3)(A), 21(e) and 27(a) of the 

2:21-cv-7339

Case 2:21-cv-07339   Document 1   Filed 09/14/21   Page 1 of 29   Page ID #:1



 

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Securities Exchange Act of 1934 (“Exchange Act”), 15 U.S.C. §§ 78u(d)(1), 

78u(d)(3)(A), 78u(e) & 78aa(a). 

2. Defendants have, directly or indirectly, made use of the means or 

instrumentalities of interstate commerce, of the mails, or of the facilities of a national 

securities exchange in connection with the transactions, acts, practices and courses of 

business alleged in this complaint.  

3. Venue is proper in this district pursuant to Section 22(a) of the Securities 

Act, 15 U.S.C. § 77v(a), and Section 27(a) of the Exchange Act, 15 U.S.C. § 78aa(a), 

because certain of the transactions, acts, practices and courses of conduct constituting 

violations of the federal securities laws occurred within this district.  In addition, 

venue is proper in this district because Defendants Lupe Rose, Sonja Shelby and 

Katherine Dirden reside in this district, and Defendant SHE Beverage Company, Inc. 

has its principal place of business in this district. 

SUMMARY 

4. This civil enforcement action involves an offering fraud perpetrated by 

Defendants SHE Beverage Company, Inc. (“SHE Beverage”) and its principals Lupe 

L. Rose, Sonja F. Shelby and Katherine E. Dirden.  Located in Lancaster, California, 

SHE Beverage produces beverages targeting female customers.  Between 2017 and 

2019, SHE Beverage raised over $15 million from unregistered stock sales to more 

than 2,000 investors from across the country.  SHE Beverage and its principals 

falsely represented to investors that they would use 30% of the offering proceeds to 

purchase beverage inventory.  In fact, they spent only approximately 2% of the 

monies they raised on beverages.  In the meantime, they misappropriated roughly half 

the offering proceeds—at least $7.5 million—in cash withdrawals and to pay personal 

expenses such as cars and trucks, rent, luxury retail goods, and trips to casinos. 

5. Defendants carried out their aggressive fund-raising by falsely 

promoting the company as being successful in a variety of ways.  Defendants 

overstated and mischaracterized the revenues earned by the company since its 

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COMPLAINT 3  

 

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inception.  Defendants claimed the company had launched its own brewery, whereas 

it had not even completed its construction.  They falsely touted the company’s bottled 

water as “proprietary” and “FDA approved,” when it was neither.  Defendants 

claimed the company had received acquisition offers in the hundreds of millions of 

dollars; in reality, it had no such offers.  The principals claimed to have millions of 

their own money invested in the company, whereas their investments were much 

more modest.  They frequently represented that the company’s planned initial public 

offering (“IPO”) was imminent, when they had not yet even filed a registration 

statement with the SEC.  They touted the acquisition of a cannabis-related company, 

concealing that it was obtained from affiliates (sisters of one of the Defendants) with 

no independent valuation, and had no operations or sales. 

6. SHE Beverage’s fraudulent stock offering was not registered with the 

SEC; thus investors lacked important information about the company’s financial 

condition.  Defendants raised money from thousands of investors in numerous states, 

including from unaccredited investors.  The company engaged in general solicitation 

over the internet and solicited investors to deposit by cash, checks, credit cards and 

electronic payment processor, at times offering referral, two-for-one, and other 

bonuses, and frequently hyping investors’ last chance to invest pre-IPO.  The only 

Form S-1 registration statement ever filed by the Defendants, in January 2020, never 

went effective and was declared abandoned in 2021. 

7. By their conduct, Defendants violated Sections 5 and 17(a) of the 

Securities Act, 15 U.S.C. §§ 77(e)(a), 77(e)(c), 77q(a), and Section 10(b) of the 

Exchange Act, 15 U.S.C. § 78j(b) and Rule 10b-5 thereunder, 17 C.F.R. § 240.10b-

5(a)-(c). 

8. The SEC seeks findings that the Defendants committed these violations; 

permanent injunctions, disgorgement with prejudgment interest, civil penalties, and 

against Defendants Rose, Shelby, and Dirden, officer and director bars. 

Case 2:21-cv-07339   Document 1   Filed 09/14/21   Page 3 of 29   Page ID #:3



 

COMPLAINT 4  

 

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THE DEFENDANTS 

9. SHE Beverage Company, Inc. (“SHE Beverage”), is a California 

corporation, which was incorporated in or about 2015, with its principal place of 

business in Lancaster, California.  SHE Beverage promotes itself primarily as a 

beverage company targeted at female consumers, along with several additional lines 

of business.  SHE Beverage has never been registered with the SEC in any capacity, 

has never had a class of securities registered with the SEC, and its securities have 

never been publicly traded.  SHE Beverage is controlled by Defendants Rose, Shelby 

and Dirden. 

10. Lupe L. Rose (“Rose”), 52, lives in Palmdale, California and holds 

herself out as SHE Beverage’s co-founder, owner, chief executive officer (“CEO”), 

president and chair of the board of directors.  Rose has never been registered with the 

SEC in any capacity and has never held any securities licenses.   

11. Sonja F. Shelby (“Shelby”), 58, lives in Palmdale, California and holds 

herself out as SHE Beverage’s co-founder, owner, vice president, treasurer, vice 

chair, chief financial officer (“CFO”), principal financial officer, and member of the 

board of directors.  Shelby has never been registered with the SEC in any capacity 

and has never held any securities licenses.   

12. Katherine E. Dirden (“Dirden”), 46, lives in Lancaster, California and 

holds herself out as SHE Beverage’s chief operations officer (“COO”), investor 

relations director, and a member of the board of directors.  Dirden has never been 

registered with the Commission in any capacity and has never held any securities 

licenses.   

THE ALLEGATIONS 

A. SHE Beverage and its Principals 

13. Rose and Shelby co-founded and began working on the concept for SHE 

Beverage in or around 2009; Rose subsequently incorporated SHE Beverage in or 

about 2015. 

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COMPLAINT 5  

 

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14. In or around February 2016, SHE Beverage hired Dirden as its COO. 

15. SHE Beverage was promoted primarily as a women-owned beverage 

manufacturer, selling beer and other brewed drinks, wine, and bottled water, aimed at 

female consumers.     

16. SHE Beverage’s offering documents identify Rose as the co-founder, 

owner, chief executive officer, president and chair of the board of directors.   

17. SHE Beverage’s offering documents identify Shelby as the co-founder, 

owner, vice president, treasurer, vice chair, chief financial officer, principal financial 

officer, and member of the board of directors. 

18. SHE Beverage’s offering documents identify Dirden as the chief 

operations officer, investor relations director, and a member of the board of directors. 

19. As its most senior executive, Rose had ultimate decision-making 

authority for SHE Beverage.  During the relevant period, Rose exercised day-to-day 

control over SHE Beverage, including meeting with beverage manufacturers, 

purchasing inventory, and marketing and delivering product.  Along with Shelby and 

Dirden, Rose was a member of SHE Beverage’s three-person executive team. 

20. Although SHE Beverage identified her as the CFO and treasurer, 

Shelby’s primary responsibilities during the relevant period were for human resources 

and other administrative duties.  Along with Rose and Dirden, Shelby was a member 

of SHE Beverage’s three-person executive team. 

21. Dirden functioned as SHE Beverage’s chief operating officer, including 

selling product and taking care of internal reporting systems.  During the relevant 

period, Dirden had primary responsibility for investor relations, including answering 

questions of prospective and actual investors about SHE Beverage’s offering.  Along 

with Rose and Shelby, Dirden was a member of SHE Beverage’s three-person 

executive team. 

22. Rose, Shelby and Dirden are all signatories on the company’s bank 

accounts.   

Case 2:21-cv-07339   Document 1   Filed 09/14/21   Page 5 of 29   Page ID #:5



 

COMPLAINT 6  

 

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23. SHE Beverage’s website addresses during the relevant period included: 

  http://www.shebeverages.com  

and 

 http://sheinvestmentguide.com. 

24. During the relevant period, Defendants utilized the following email 

addresses: 

 Rose: [email protected], [email protected],  

 Shelby:  [email protected], [email protected], 

[email protected],  

and  

 Dirden:  [email protected].  

B. Defendants’ Offer and Sale of Securities  

25. Between 2017 and 2019, SHE Beverage raised over $15 million from 

more than 2,000 investors nationwide.  

26. SHE Beverage issued securities in the form of shares of SHE Beverage. 

27. Investors purchased shares from SHE Beverage through a variety of 

means, including cashier’s checks, personal checks, wires, credit cards, transactions 

through PayPal, cash or by deposits directly into SHE Beverage’s bank account. 

28. SHE Beverage offered and sold securities using offering memoranda, 

investment guides, its websites, emails, and verbal communications. 

29. Between approximately October 2017 and mid-June 2018, SHE 

Beverage offered and sold its shares through an offering memorandum (the “2017 

OM”). 

30. SHE Beverage utilized an outside consultant to prepare the 2017 OM. 

31. The 2017 OM offered shares of SHE Beverage’s common stock at $2.50 

per share.   

32. The 2017 OM included a cover letter and subscription agreement.  The 

subscription agreement requested prospective investors to provide information as to 

Case 2:21-cv-07339   Document 1   Filed 09/14/21   Page 6 of 29   Page ID #:6

http://www.shebeverages.com/
http://sheinvestmentguide.com/
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]
mailto:[email protected]


COMPLAINT 7 

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their status as an accredited investor. 

33. SHE Beverage provided the 2017 OM to prospective investors during in-

person meetings. 

34. Beginning in or about mid-June 2018, SHE Beverage offered and sold

stock to investors through a private placement memorandum dated June 20, 2018 (the 

“2018 PPM”).  

35. Rose, Shelby and Dirden worked with an outside consultant to prepare

the 2018 PPM. 

36. The 2018 PPM offered up to $25 million of SHE Beverage’s common

stock at $2.50 per share. 

37. The 2018 PPM stated that the shares were exempt from registration

under Securities Act Sections 3(b), 4(2), and Rule 506 thereunder, and that 

prospective investors were required to meet “suitability standards” set forth in the 

2018 PPM. 

38. SHE Beverage provided the 2018 PPM to prospective investors during

in-person meetings or by email.  

39. Rose, Shelby and Dirden reviewed the 2018 PPM before it was provided

to investors, including the disclosures on the use of proceeds. 

40. SHE Beverage also solicited investors using a 2018 SHE Beverage

Investment Guide and Corporate Update (the “2018 Investment Guide”). 

41. Rose created the 2018 Investment Guide and it was distributed at

investor meetings along with the 2018 PPM. 

42. During SHE Beverage’s offering, the 2018 PPM and the 2018

Investment Guide were available on SHE Beverage’s websites. 

43. The 2018 Investment Guide included a “New Member Welcome Letter”

signed by Rose, Shelby and Dirden. 

44. SHE Beverage also solicited investors using a 2019 SHE Brand

Beverage Investment Guide (the “2019 Investment Guide”). 

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COMPLAINT 8  

 

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45. The 2019 Investment Guide was available on SHE Beverage’s website 

from at least May 2019 to December 2019. 

46. Rose assisted with the preparation of the 2019 Investment Guide, and 

Rose and Dirden knew it was accessible on the company’s website. 

47. SHE Beverage publicly offered its securities to investors through its 

websites through at least December 2019.   

48. SHE Beverage’s website included a section titled “Why You Should 

Invest In Our Beverage Company” with a link to two letters from Rose, Shelby and 

Dirden. 

49. The SHE Investment Guide website promoted that the company was 

accepting investments and provided a link to the 2018 PPM. 

50. Beginning in or around December 2017 and throughout the offering, 

SHE Beverage sent email messages to existing investors approximately once a 

month.  The messages promoted additional investment in SHE Beverage and included 

information about SHE Beverage’s securities offering.   

51. The investor email messages were formatted as letters to investors with 

signatures variously from “the SHE Beverage Team” or individually from Rose or 

Dirden.   

52. For example, in or around the end of December 2018, in an email to 

investors signed “SHE Beverage Executive Team,” SHE Beverage promoted a 

“Limited Time Offer” to purchase two for one shares, noting that Rose, Shelby and 

Dirden wanted to “provide our current investors one final amazing opportunity” to 

invest at this price, through early January 2019. 

53. As another example, in one 2019 email signed by Rose, SHE Beverage 

promoted a “new minimum level of investment of $1,000 at $2.50 per share…[for] 

new and existing investors,” and that investors could “invest an ADDITIONAL 

investment” of at least $1,000 to obtain a chance to win a free trip. 

54. In another email dated on or about April 24, 2019, signed by Rose, SHE 

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COMPLAINT 9  

 

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Beverage promoted the opportunity to “purchase at a discounted rate” and “refer 

friends and family.” 

55. In another email dated on or around November 10, 2019, signed by 

Rose, SHE Beverage promoted the opportunity to invest $50,000 and receive 

“advisory board shares,” stating, “can you imagine when we open larger or grow to 

50 dollars a share?” 

56. In another email dated in or around 2019, Dirden wrote that SHE 

Beverage was “still fund-raising during this process so please continue to send us 

anybody interested in investing or if you’d like to add to you (sic) portfolio please 

feel free to do so,” directing prospective investors to contact her with any questions. 

57. Rose approved the investor messages for distribution, and Dirden sent 

them out. 

58. Between approximately 2018 and 2019, SHE Beverage hosted three to 

four in-person investor meetings a year, attended by SHE Beverage’s principals and 

prospective and actual investors.  Some investor meetings were streamed to out-of-

town investors.   

59. With Shelby and Dirden in attendance, Rose ran the investor meetings 

and presented at them. 

60. At the investor meetings, SHE Beverage updated investors about the 

business and provided its beverage products for sampling.   

61. At the investor meetings, SHE Beverage made available its offering 

materials, including the 2018 PPM and the 2018 Investment Guide.   

62. During SHE Beverage’s offering, Rose and Dirden each directly 

solicited investors. 

63. For example, on or about August 6, 2018, Rose hosted a “meet & greet” 

for new investors to discuss the Investment Guide. 

64. Dirden spoke to prospective and actual investors to answer questions 

about the offering, and was identified as the person to contact with inquiries. 

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COMPLAINT 10  

 

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65. Defendants initially solicited friends and family to invest. 

Subsequently, they began soliciting friends and family of their investors, and engaged 

in a general solicitation of investors for SHE Beverage’s offering. 

66. SHE Beverage offered referral bonuses, in the form of additional shares, 

for investors who brought in additional investors to SHE Beverage.  

67. SHE Beverage’s offering was nationwide with more than 2,000 investors 

who live in at least 38 states, and Guam, Puerto Rico, and Washington, D.C. 

C. Defendants’ Fraudulent Scheme and Material Misrepresentations 

and Omissions 

68. SHE Beverage and its principals engaged in a scheme to defraud and 

made material misrepresentations and omissions to prospective and actual investors 

during the offering. 

69. SHE Beverage was the maker of the statements in its offering 

memoranda, investment guides, websites, press releases, and investor emails. 

70. As SHE Beverage’s principals with day-to-day control over its 

operations and disclosures, Rose, Shelby, and Dirden were makers of the statements 

in SHE Beverage’s offering memoranda, investment guides, websites, press releases, 

and investor emails. 

71. Rose, Shelby and Dirden each directly made and signed their names on 

statements to investors, including signing the investment guides, signing investor 

emails as the executive team, and for Rose and Dirden, signing investor emails 

individually.  Rose was also listed as the contact on SHE Beverage’s press releases. 

1. Defendants’ misuse and misappropriation of investor proceeds 

72. SHE Beverage and its principals misused investor proceeds by utilizing 

only 2% of investor funds to purchase beverage inventory, contrary to the disclosures 

in SHE Beverage’s offering materials. 

73. Additionally, Defendants misappropriated investor funds by spending 

millions on personal expenses and cash withdrawals, far in excess of any disclosed 

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COMPLAINT 11  

 

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amounts of salary or compensation to the principals.  

74. SHE Beverage’s 2017 OM represented that the “proceeds of the offering 

will be used for the Company’s Business Plan and management has retained 

discretion to use the proceeds according to the Use of Proceeds of the Offering and 

for other related uses.”   

75. The 2017 OM did not include either a business plan or a use of proceeds 

section, but described the business as “selling high quality beverages with a focus on 

elite branding and brand management.”   

76. SHE Beverage’s 2018 PPM included a use of proceeds section: 

 
 USE OF PROCEEDS  

Amount Item Percentage 

$12,500,000 Working Capital/Operating Expenses 50% 

$7,500,000 Inventory 30% 

$5,000,000 Sales, Marketing, Salaries 20% 

$25,000,000 Total 100% 

 
77. The 2018 PPM thus represented that approximately 30% of offering 

proceeds, or approximately $4.5 million (representing 30% of the offering proceeds 

actually raised), would be used on inventory. 

78. During SHE Beverage’s offering, Defendants reiterated the intended 

uses of investor proceeds in other documents provided to investors.  

79. For example, the 2018 Investment Guide included descriptions of the 

company and its beverage products, stating that the company would “create an elite 

line that will not only dominate the Beverage Industry, but also change the way we 

drink one SIP at a time.”  The 2018 Investment Guide further stated that “owner 

funding and further investor generated cash flow will enable the expansion plan.”   

80. Similarly, the 2019 Investment Guide featured descriptions of SHE 

Beverage’s beverage products and explained that “the goal is to raise 1 billion dollars 

to grow the brand.”   

81. Contrary to its representations to investors, between 2015 and 2021, 

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COMPLAINT 12  

 

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SHE Beverage spent only approximately $321,971 on beverage inventory, or 

approximately 2% of the offering proceeds, as follows:   

(a) from 2015 to 2019, SHE Beverage paid approximately $195,375 

to three breweries to brew craft beer and hard punch for retail sale under the SHE 

Beverage brand name; 

(b) from 2018 to 2021, SHE Beverage paid approximately $71,550 to 

a California distributor for its proprietary alkaline, electrolyte, purified and spring 

bottled waters for retail sale under the SHE Beverage brand name;   

(c) in or around 2019, SHE Beverage paid approximately $26,007 to 

a Florida distributor for its CBD bottled water to sell under the SHE Beverage brand 

name; and  

(d) in or around 2019, SHE Beverage paid approximately $29,039 for 

a Lancaster winery to create a private-label rosé wine. 

82. Given the limited amounts spent on beverage inventory during the 

offering, Defendants’ representations that they would use 30% of investor proceeds 

on inventory were materially false and misleading.   

83. Defendants did not disclose to investors that their purchases of inventory 

were materially lower than the offering materials represented. 

84. Reasonable investors would have found it important to their investment 

decision to know that Defendants were not purchasing the amounts of inventory the 

offering materials represented, which would necessarily impact the potential sales of 

SHE Beverage product. 

85. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that SHE Beverage was misusing investor funds by not purchasing 

beverage inventory consistent with their representations to investors. 

86. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to SHE Beverage’s use of investor funds, by not purchasing beverage 

inventory consistent with their representations to investors. 

Case 2:21-cv-07339   Document 1   Filed 09/14/21   Page 12 of 29   Page ID #:12



 

COMPLAINT 13  

 

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87. Rose, Shelby and Dirden also misappropriated investor funds.  

88. The 2017 OM did not disclose that any proceeds would be used for 

executive compensation. 

89. The 2018 PPM represented that approximately 20% of the offering 

proceeds, or $3 million (representing 20% of the $15 million of offering proceeds 

actually raised), would be used for sales, salaries and marketing.  

90. However, between 2016 and 2021, Rose, Shelby and Dirden took out at 

least $7.5 million in investor proceeds, as follows: 

(a) approximately $6 million in cash withdrawals and transfers to 

Rose, Shelby and Dirden’s personal bank accounts; 

(b) approximately $1.2 million spent at casinos; 

(c) approximately $180,000 to purchase 8 cars and trucks for personal 

use and for payment of a title loan on Shelby’s Porsche; 

(d) approximately $100,000 in payments for the lease on the house 

occupied by Rose and Shelby; and  

(e) approximately $50,000 in purchases from luxury clothing retailers 

such as Gucci and Louis Vuitton. 

91. The amounts Rose, Shelby and Dirden received from the offering 

proceeds materially exceeded the amount allocated for the entire company’s sales, 

salary and marketing expenses in the 2018 PPM.   

92. Investors were not told that SHE Beverage’s principals would use 

investor money for their personal expenses. 

93. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverage’s principals used roughly half of all proceeds to 

pay their personal expenses and for cash withdrawals.  

94. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that they were misappropriating investor funds. 

95. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

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COMPLAINT 14  

 

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care as to their expenditures of investor funds. 

2. Defendants falsely represented the amount of revenues earned 

from product sales 

96. The 2018 PPM represented that “[t]he Company is a relatively new 

venture, which has generated approximately $4-5 million dollars in revenue and has 

an average profit margin of 40% across the span of its product lines.”   

97. The product lines identified in the 2018 PPM were beer and bottled 

water. 

98. The PPM 2018 PPM did not identify events as a source of revenues. 

99. The statement that the company had generated $4-5 million dollars in 

revenue was false. 

100. As of the end of fiscal year 2018, SHE Beverage had sold less than 

$263,000 of merchandise.  

101. SHE Beverage’s audited financial statements, disclosed for the first time 

to investors with the company’s January 2020 Form S-1 filed with the SEC, stated 

that the company had only the following revenues as of December 31, 2017 and 

December 31, 2018: 

REVENUE Year ended Dec. 31, 2018 Year ended Dec. 31, 2017 

Event revenue $1,628,875 $1,569,690 

Merchandise revenue $110,324 $152,670 

Total revenue $1,729,199 $1,722,360 

102. The company did not have $4-5 million in revenues in 2018, and of the 

revenues it had, more than 90% was from event rentals, rather than any product sales. 

103. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverage’s revenues did not approach the $4-5 million 

described to investors, and that the revenues it did have came overwhelmingly from 

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COMPLAINT 15  

 

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events. 

104.  Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s statements of earned revenues were materially 

overstated and omitted the source of the majority of the company’s revenues. 

105. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to their statements of revenues purportedly earned by SHE Beverage. 

3. Defendants falsely depicted the status of SHE Beverage’s 

brewery 

106. In or around 2018 through 2020, SHE Beverage falsely promoted to 

prospective and actual investors that it had opened and was operating a brewery for 

its alcoholic beverages.   

107. For example, in or around October 2018, SHE Beverage sent an email 

message to its existing investors promoting the “grand opening” of its Lancaster 

brewery.   

108. As another example, on or about December 11, 2018, SHE Beverage 

issued a press release titled “SHE Beverage Company, Inc. Announces Acquisitions, 

Re-Brandings, and Public Offering.” 

109. In the December 11, 2018 press release, SHE Beverage claimed that its 

locations included “a brewery and manufacturing site.” 

110. The December 11, 2018 press release also stated that: 

SHE Beverage Company has grown its brand to 

unbelievable heights within the last four years.  Opening its 

10,000 square foot brewery in Lancaster CA…” (emphasis 

added). 

111. SHE Beverage repeated the description of its purported brewery in seven 

additional press releases, from January 2019 through January 2020. 

112. Additionally, in press releases issued on or about January 22, 2019 and 

March 26, 2019, SHE Beverage described itself as “the female-owned and operated 

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COMPLAINT 16  

 

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craft beer brewery...” and the “female-owned and renowned craft beer brewery…”   

113. The 2019 Investment Guide listed a brewery as among SHE Beverage’s 

assets. 

114. SHE Beverage’s Form S-1 filed in January 2020, however, revealed that 

the company was “currently in process of constructing a brewery….” 

115. Contrary to its representations, SHE Beverage has never had an 

operational brewery. 

116. The only beer SHE Beverage sold to consumers came from contract 

brewers. 

117. As of at least January 2021, SHE Beverage had not installed the brewery 

equipment it had purchased. 

118. SHE Beverage had not, as of at least January 2021, completed the 

construction of the brewery. 

119. SHE Beverage had not, as of at least January 2021, obtained a certificate 

of occupancy for the brewery.   

120. Other than test batches, as of January 2021, SHE Beverage had not 

brewed any beverages at the site of its planned brewery. 

121. In January 2021, the California Department of Alcoholic Beverage 

Control indefinitely suspended SHE Beverage’s small beer manufacturer license 

because, among other reasons, SHE Beverage had not engaged in commercial beer 

manufacturing. 

122. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverage’s brewery was not yet constructed, nor 

operational. 

123. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s statements regarding the status of its brewery were false 

and misleading. 

124. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

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COMPLAINT 17  

 

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care as to SHE Beverage’s statements regarding the status of its purported brewery. 

4. Defendants misrepresented the status of SHE Beverage’s 

“proprietary” water formula 

125. Defendants falsely represented in the 2018 PPM that SHE Beverage sold 

bottled water made with a proprietary formula that cured cancer and spina bifida, had 

other health benefits (for heart health, fertility, aging, anxiety, PMS, and menopause) 

and was approved by the FDA.   

126. The 2018 Investment Guide also claimed that the company used a 

“proprietary process [that] allow[ed it] to transform water from any source…” 

127. Rose repeated these claims in a recorded investor meeting on or about 

June 2, 2019. 

128. Contrary to Defendants’ representations, the bottled water sold under the 

SHE Beverage private label was not proprietary and was not FDA-approved. 

129. Prior to 2017, SHE Beverage purchased bottled water and antioxidant 

shots from a third party contractor, but neither product was sold to consumers. 

130. After 2017, SHE Beverage purchased bottled water from third party 

distributors, to sell as SHE Beverage-branded product. 

131. SHE Beverage did not make and sell its own proprietary water, but 

purchased commercially available bottled water from distributors for resale. 

132. SHE Beverage’s bottled water has never had FDA approval. 

133. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverage’s water was not proprietary and did not have 

FDA approval. 

134. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s statements regarding the nature and status of its bottled 

water were false and misleading. 

135. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to their statements regarding the nature and status of SHE Beverage’s bottled 

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COMPLAINT 18  

 

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water. 

5. Defendants misrepresented the acquisition offers received for 

SHE Beverage  

136. In or around 2018, SHE Beverage represented to investors that it had 

received acquisition offers ranging from $120 million to $500 million.   

137. For example, the 2018 Investment Guide stated:  “Alongside SHE 

Beverage Company’s current growth, and public attention we know based upon 

recent offers to buy our brand (which range from 120 Million to 500 Million) that 

SHE Beverage Company’s ‘Public Announcement’ will deliver the expectation to 

catapult our stock to a billion-dollar offer.”   

138. On or about June 2, 2019, Rose touted the acquisition offers at a 

recorded investor meeting, identifying the $120 million offer as coming from a global 

spirits company (“Beverage Company A”) and the $500 million offer as coming from 

a multilevel marketing company (“Network Marketing Company B”).   

139. Defendants’ statements concerning the purported offers to acquire SHE 

Beverage were false.   

140. Beverage Company A never made an offer or engaged in substantive 

negotiations to acquire SHE Beverage. 

141. Network Marketing Company B has no record of any association or 

communication with SHE Beverage, including of any offer to acquire SHE Beverage. 

142. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverages had not received offers in the hundreds of 

millions of dollars from these two companies. 

143. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s statements regarding acquisition offers received for 

SHE Beverage were false or misleading. 

144. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to SHE Beverage’s statements regarding purported acquisition offers. 

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COMPLAINT 19  

 

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6. Defendants overstated the principals’ investments in the 

business 

145. The 2019 Investment Guide stated that Rose, Shelby and Dirden had 

“personally invested [$]3.7 [m]illion foundational capital to create the brand, refine 

its packaging, build a trusted distribution network, and gain first-hand exposure to 

several industry barriers that routinely blind-side new brands.”   

146. SHE Beverage records show that Rose, Shelby and Dirden invested less 

than $200,000. 

147. Reasonable investors would have found it important to their investment 

decision to know that the principals had substantially less money invested in the 

business as their “skin in the game.”   

148. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that they were overstating the amount of their personal financial investment 

in the company. 

149. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care with respect to statements of their personal financial investment in the company. 

7. Defendants falsely portrayed the imminence of the company’s 

planned initial public offering 

150. During the offering, SHE Beverage made a series of materially 

misleading statements regarding the company’s planned IPO, encouraging existing 

investors to invest additional monies while the company was still “pre-IPO” and the 

share price was $2.50 per share.  Defendants encouraged investors to purchase shares 

right away, stating that the stock price would be higher after the IPO. 

151. Defendants repeatedly created the false appearance that the company’s 

IPO was imminent, variously, within days, weeks or months, as a means to encourage 

prospective or actual investors to invest their monies. 

152. For example, on or about February 8, 2018, in an email to investors 

signed by Rose, SHE Beverage stated that investors who invested “within the next 

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COMPLAINT 20  

 

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week or so will have the registered shares through the SEC.” 

153. As another example, in or about October 2018, in a “notice to 

shareholders,” SHE Beverage told investors the “IPO will open at $15.00, that’s 

right! $15…,” encouraging existing shareholders to buy stock at $2.50/share and refer 

friends and family to purchase at $5.00/share. 

154. As another example, on or about March 26, 2019, SHE Beverage issued 

a press release stating that it was “[d]ays away from its public offering.” 

155. As another example, on or about April 24, 2019, a SHE Beverage email 

to investors, signed by Rose, stated that the company was “days away from ringing 

that bell.” 

156. As another example, on or about May 14, 2019, a SHE Beverage email 

to investors stated that “market opening day” was “drawing near,” and that investors 

had their “final opportunity” to purchase shares at $2.50 per share. 

157. On or about August 1, 2019, SHE Beverage again announced in a press 

release that it was “days away from going public and qualifying for NASDAQ.” 

158. It was not until on or about January 2020, that SHE Beverage first filed a 

Form S-1 registration statement with the SEC for an initial public offering.   

159. The audited financial statements filed with SHE Beverage’s Form S-1 on 

January 2020 only covered the fiscal years 2017 and 2018; the company did not file 

any audited financial statements for its fiscal year 2019. 

160. Reasonable investors would have found it important to their investment 

decision to know that SHE Beverage’s IPO was not as imminent as described. 

161. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s statements regarding the imminence of the company’s 

anticipated IPO were false and misleading. 

162. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to SHE Beverage’s statements regarding its purportedly imminent IPO. 

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COMPLAINT 21  

 

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8. Defendants falsely portrayed SHE Beverage’s acquisition of 

Elite Green 

163. On or about September 9, 2018, SHE Beverage acquired Elite Green 

Solutions (“Elite Green”), a cannabis-related product company, for a combination of 

cash and stock. 

164. On or about December 11, 2018, SHE Beverage issued a press release 

detailing its “incredible advancements,” including SHE Beverage’s acquisition of 

Elite Green, stating that the company had been “rebranded” as “The Pink Leaf.”   

165. SHE Beverage also promoted the Elite Green acquisition in investor 

emails. 

166. For example, in an email to investors on or about 2019 signed by Rose 

soliciting additional investments in SHE Beverage, the company touted its plans for 

Elite Green (re-branded as the Pink Leaf), stating that it “recently hired its growers” 

for a cannabis grow farm and that it “will begin manufacturing CBD, THC, and 

Cannabis Products.”     

167. At the time it was acquired, Elite Green did not have any cannabis 

licenses or growing facilities and had not sold any product.   

168. SHE Beverage did not obtain an independent valuation of Elite Green 

before acquiring it. 

169. The 2018 PPM stated that the company is “not expected to have 

significant dealings with affiliates.” 

170. Prior to its acquisition by SHE Beverage, Elite Green was owned by 

Shelby’s sisters. 

171. SHE Beverage’s Form S-1 filed in January 2020 revealed that the Elite 

Green subsidiary, subsequently renamed “Pink Leaf by SHE,” as of 2020, had “no 

assets or operations, other than capitalized product formulations purchased by the 

Company.”  

172. Defendants failed to disclose to SHE Beverage investors that Elite Green 

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COMPLAINT 22  

 

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had no revenues, no licenses to sell cannabis and that it was acquired from related 

parties without any independent valuation.   

173. Reasonable investors would have found it important to their investment 

decisions to know that SHE Beverage’s acquisition had no business operations and 

had not been independently valued prior to its acquisition, as well as that Elite Green 

was acquired from related parties. 

174. Defendants Rose, Shelby and Dirden knew, or were reckless in not 

knowing, that the company’s disclosures regarding SHE Beverage’s acquisition of 

Elite Green were false and misleading. 

175. In the alternative, Rose, Shelby and Dirden failed to exercise reasonable 

care as to SHE Beverage’s disclosures regarding its acquisition of Elite Green. 

D. SHE Beverage’s Form S-1 Filing 

176. On or about January 2020, SHE Beverage filed a Form S-1 registration 

statement with the SEC for an initial public offering. 

177. The S-1 offered approximately 6.8 million shares at $15 per share. 

178. Rose, Shelby and Dirden signed the Form S-1 on behalf of SHE 

Beverage. 

179. Rose, Shelby and Dirden assisted in preparation of the Form S-1 and 

reviewed it before it was filed with the SEC.  

180. Rose, Shelby and Dirden signed a management representation letter to 

SHE Beverage’s outside auditor for purposes of the financial statements. 

181. The Form S-1 filing was the first time that SHE Beverage made its 

audited financial statements available to investors.  

182. In or about February 2021, the SEC issued an order declaring the 

registration statement abandoned. 

E. Defendants Acted with Scienter and Failed to Exercise Reasonable 

Care 

183. Defendants Rose, Shelby and Dirden acted with scienter, and failed to 

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COMPLAINT 23  

 

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exercise reasonable care. 

184. Rose was SHE Beverage’s most senior executive and had ultimate 

decision-making authority for SHE Beverage.  She reviewed the disclosures made to 

investors during the offering and/or signed her name to them, including the offering 

memoranda, the investment guides, press releases, investor emails, and the 

company’s Form S-1.  She spoke at investor meetings and directly solicited SHE 

Beverage’s investors during the offering.  She worked directly with the consultant 

who assisted in the preparation of SHE Beverage’s offering materials. 

185. Shelby was held out as SHE Beverage’s most senior financial officer. 

She reviewed the disclosures made to investors during the offering and/or signed her 

name to them, including the offering memoranda, the investment guides, and the 

company’s Form S-1.  She signed SHE Beverage investor emails as a member of 

SHE Beverage’s executive team.  She attended investor meetings where offering 

materials were provided.  She worked directly with the consultant who assisted in the 

preparation of SHE Beverage’s offering materials. 

186. Dirden was SHE Beverage’s point of contact for SHE Beverage’s 

investor relations. She reviewed the disclosures made to investors during the offering 

and signed her name to them, including the offering memoranda, the investment 

guides, investor emails, and the company’s Form S-1.  She attended investor 

meetings where offering materials were provided, and directly solicited SHE 

Beverage’s investors during the offering.  She worked directly with the consultant 

who assisted in the preparation of SHE Beverage’s offering materials. 

187. Rose, Shelby and Dirden each had access to and control over SHE 

Beverage’s bank accounts. 

188. Because Rose, Shelby and Dirden were SHE Beverage’s principals, their 

scienter and failure to exercise reasonable care are imputed to SHE Beverage. 

F. Defendants’ Registration Violations 

189. SHE Beverage’s offering was not registered with the SEC, and no 

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COMPLAINT 24  

 

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exemption from registration applied to the offering. 

190. SHE Beverage’s 2017 OM and 2018 PPM asked prospective investors to 

attest that they were accredited investors. 

191. Defendants did not take steps to verify prospective investors’ financial 

sophistication or whether they were accredited investors. 

192. SHE Beverage engaged in a general solicitation for investors. 

193. SHE Beverage’s offering included investors across numerous states. 

194. SHE Beverage’s investors included investors who were not accredited 

investors. 

195. Defendants did not provide prospective investors with detailed financial 

information about the offering prior to their investments.     

196. As the issuer of its shares, SHE Beverage offered and sold securities to 

prospective and actual investors. 

197. Rose, Shelby and Dirden directly offered and sold SHE Beverage 

securities.  Each communicated with investors concerning the offering, individually 

or as a member of the company’s three-person executive team, by email, in-person, or 

by phone, and/or attended investor meetings where prospective and actual investors 

were provided SHE Beverage’s offering materials. 

198. Rose, Shelby and Dirden indirectly offered and sold SHE Beverage 

securities.  Each was a substantial factor and a necessary participant in the SHE 

Beverage stock sales. 

FIRST CLAIM FOR RELIEF 

Fraud in the Connection with the Purchase and Sale of Securities 

Violations of Section 10(b) of the Exchange Act and Rule 10b-5 

(against all Defendants) 

199. The SEC realleges and incorporates by reference paragraphs 1 through 

198 above. 

200. Defendants SHE Beverage, Rose, Shelby and Dirden carried out a 

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COMPLAINT 25  

 

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fraudulent offering and made material misrepresentations and omissions to 

prospective and actual investors.  Touting SHE Beverage as a successful beverage 

company, Defendants concealed that minimal funds were spent to purchase 

inventory, while Rose, Shelby and Dirden funneled investor monies to their personal 

expenses and withdrew it in cash.  Defendants overstated and mischaracterized the 

company’s revenues and their own investments in the company; advertised offers to 

buy the company they had never received; and falsely portrayed the company’s 

products and the imminence of its IPO, all in an effort to continue bringing in 

investor monies that they spent in ways that were never disclosed to investors. 

201. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden, and each of them, have, directly or indirectly, in connection 

with the purchase or sale of a security, by the use of means or instrumentalities of 

interstate commerce, of the mails, or of the facilities of a national securities 

exchange:  (a) employed devices, schemes, or artifices to defraud; (b) made untrue 

statements of a material fact or omitted to state a material fact necessary in order to 

make the statements made, in the light of the circumstances under which they were 

made, not misleading; and (c) engaged in acts, practices, or courses of business which 

operated or would operate as a fraud or deceit upon other persons. 

202. Defendants SHE Beverage, Rose, Shelby and Dirden have, with scienter, 

employed devices, schemes and artifices to defraud; made untrue statements of a 

material fact or omitted to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, not 

misleading; and engaged in acts, practices or courses of conduct that operated as a 

fraud on the investing public by the conduct described in detail above. 

203. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden have violated, and unless restrained and enjoined will 

continue to violate, Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 

10b-5(a), 10b-5(b), and 10b-5(c) thereunder, 17 C.F.R. §§ 240.10b-5(a), 240.10b-5(b) 

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COMPLAINT 26  

 

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& 240.10b-5(c). 

SECOND CLAIM FOR RELIEF 

Fraud in the Offer or Sale of Securities 

Violations of Section 17(a) of the Securities Act 

(against all Defendants) 

204. The SEC realleges and incorporates by reference paragraphs 1 through 

198 above. 

205. Defendants SHE Beverage, Rose, Shelby and Dirden carried out a 

fraudulent offering and made material misrepresentations and omissions to 

prospective and actual investors.  Touting SHE Beverage as a successful beverage 

company, Defendants concealed that minimal funds were spent to purchase 

inventory, while Rose, Shelby and Dirden funneled investor monies to their personal 

expenses and withdrew it in cash.  Defendants overstated and mischaracterized the 

company’s revenues and their own investments in the company; advertised offers to 

buy the company they had never received; and falsely portrayed the company’s 

products and the imminence of its IPO, all in an effort to continue bringing in 

investor monies that they spent in ways that were never disclosed to investors. 

206. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden, and each of them, have, directly or indirectly, in the offer 

or sale of securities, and by the use of means or instruments of transportation or 

communication in interstate commerce or by use of the mails directly or indirectly:  

(a) employed devices, schemes, or artifices to defraud; (b) obtained money or 

property by means of untrue statements of a material fact or by omitting to state a 

material fact necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; and (c) engaged in 

transactions, practices, or courses of business which operated or would operate as a 

fraud or deceit upon the purchaser. 

207. Defendants SHE Beverage, Rose, Shelby and Dirden, with scienter, 

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COMPLAINT 27  

 

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employed devices, schemes and artifices to defraud; with scienter or negligence, 

obtained money or property by means of untrue statements of a material fact or by 

omitting to state a material fact necessary in order to make the statements made, in 

light of the circumstances under which they were made, not misleading; and, with 

scienter or negligence, engaged in transactions, practices, or courses of business 

which operated or would operate as a fraud or deceit upon the purchaser. 

208. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden have violated, and unless restrained and enjoined will 

continue to violate, Sections 17(a)(1), 17(a)(2), and 17(a)(3) of the Securities Act, 15 

U.S.C. §§ 77q(a)(1), 77q(a)(2), & 77q(a)(3). 

THIRD CLAIM FOR RELIEF 

Unregistered Offer and Sale of Securities 

Violations of Sections 5(a) and 5(c) of the Securities Act 

(against all Defendants) 

209. The SEC realleges and incorporates by reference paragraphs 1 through 

198 above. 

210. Defendants’ offers and sale of SHE Beverage’s stock were never 

registered with the SEC, nor were they subject to any exemption from registration.  

Defendants engaged in a nationwide offering using general solicitation; sold to 

unaccredited investors; and took no steps to verify the sophistication or accreditation 

status of prospective investors.  Defendants directly offered and sold SHE Beverage’s 

stock and Defendants Rose, Shelby and Dirden also indirectly offered and sold the 

company’s stock, as each was a necessary participant and a substantial factor in the 

company’s millions of dollars in stock sales to its thousands of investors.  

211. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden, and each of them, directly or indirectly, singly and in 

concert with others, have made use of the means or instruments of transportation or 

communication in interstate commerce, or of the mails, to offer to sell or to sell 

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COMPLAINT 28  

 

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securities, or carried or caused to be carried through the mails or in interstate 

commerce, by means or instruments of transportation, securities for the purpose of 

sale or for delivery after sale, when no registration statement had been filed or was in 

effect as to such securities, and when no exemption from registration was applicable. 

212. By engaging in the conduct described above, Defendants SHE Beverage, 

Rose, Shelby and Dirden have violated, and unless restrained and enjoined, are 

reasonably likely to continue to violate, Sections 5(a) and 5(c), 15 U.S.C. §§ 77e(a) & 

77e(c). 

PRAYER FOR RELIEF 

WHEREFORE, the SEC respectfully requests that the Court: 

I. 

Issue findings of fact and conclusions of law that Defendants committed the 

alleged violations. 

II. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants SHE Beverage, Rose, Shelby and 

Dirden, and their officers, agents, servants, employees and attorneys, and those 

persons in active concert or participation with any of them, who receive actual notice 

of the judgment by personal service or otherwise, and each of them, from violating 

Securities Act Section 17(a) [15 U.S.C. §77q(a)], and Exchange Act Section 10(b) 

[15 U.S.C. §§ 78j(b)] and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. 

III. 

Issue judgments, in forms consistent with Rule 65(d) of the Federal Rules of 

Civil Procedure, permanently enjoining Defendants SHE Beverage, Rose, Shelby and 

Dirden, and their officers, agents, servants, employees and attorneys, and those 

persons in active concert or participation with any of them, who receive actual notice 

of the judgment by personal service or otherwise, and each of them, from violating 

Sections 5(a) and 5(c) of the Securities Act [15 U.S.C. §§ 77e(a), 77e(c)]. 

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COMPLAINT 29 

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IV. 

Order Defendants to disgorge all funds received from their illegal conduct, 

together with prejudgment interest thereon. 

V. 

Order Defendants to pay civil penalties under Section 20(d) of the Securities 

Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. § 

78u(d)(3)]. 

VI. 

Enter an order against Defendants Rose, Shelby and Dirden, pursuant to 

Sections 20(e) of the Securities Act, 15 U.S.C. § 77t(e) and Sections 2l(d)(2) of the 

Exchange Act, 15 U.S.C. § 78u(d)(2), prohibiting each of them from acting as an 

officer or director of any issuer that has a class of securities registered pursuant to 

Section 12 of the Exchange Act, 15 U.S.C. § 781 or that is required to file reports 

pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d). 

VII. 

Retain jurisdiction of this action in accordance with the principles of equity and 

the Federal Rules of Civil Procedure in order to implement and carry out the terms of 

all orders and decrees that may be entered, or to entertain any suitable application or 

motion for additional relief within the jurisdiction of this Court. 

VIII. 

Grant such other and further relief as this Court may determine to be just and 

necessary. 

Dated:  September 14, 2021 

/s/ Amy Jane Longo 

Amy Jane Longo 
Janet Rich Weissman 
Attorneys for Plaintiff 
Securities and Exchange Commission 

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