back to article Buzz kill: Crook, 73, conned investors into shoveling millions into geek-friendly caffeine-loaded chocs that didn't exist. Now he's in jail

A 73-year-old fraudster has been sentenced to four years in prison for conspiracy to defraud – after bilking investors out of $2.3m (£1.7m) by convincing them that they were investing in a sure-fire winner: caffeine-infused chocolates for the tech sector. Barry Schwartz, along with co-conspirators Lisa Bershan and Joel …

  1. Lyle Dietz

    I don't get it...

    If they actually had a product I'm sure it would have sold quite well. Why bother with all this chicanery for a small pay day when you could make more money by actually making the advertised product?

    1. Sandtitz Silver badge

      Re: I don't get it...

      "If they actually had a product I'm sure it would have sold quite well."

      Yes, only if. But they didn't have a product. From the article:

      "...sent out samples, which turned out to be bog-standard chocolate with no extra caffeine included, other than what’s naturally in the sweet stuff."

      1. keithpeter
        Windows

        Re: I don't get it...

        One wonders if putting some coffee in a food mixer with the chocolate concentrate used by confectioners would result in something that could be called a 'product sample' even if not a very compelling one.

        I suspect that the fraud bit was pretending that famous companies were interested rather than the actual lack of product.

        Tramp: me and money don't mix

    2. W.S.Gosset Silver badge

      Re: I don't get it...

      because that would've involved Working

      1. trindflo

        Re: I don't get it...

        And using some of the money to produce products.

    3. veti Silver badge

      Re: I don't get it...

      Chocolate-coated coffee beans are already a thing.

      1. Michael Hoffmann
        Thumb Up

        Re: I don't get it...

        Indeed and only the highest trained History Monks (or sweepers) can resist their lure as we learned in Thief of Time. I lack that skill utterly.

    4. Nevermind

      Re: I don't get it...

      It is already a thing, I like the plain one...https://www.scho-ka-kola.de

    5. katrinab Silver badge
      Meh

      Re: I don't get it...

      A Google shopping search tells me there are a few companies already doing this.

      What does this company have to offer that these ones don't? Probably nothing, so they would be competing on price. Hôtel Chocolat's offering is probably going to represent the price ceiling in this market because it would be very difficult to justify a higher price than them, £6 for a 115g bag, so profit margins will be very small.

    6. LucreLout Silver badge

      Re: I don't get it...

      Why bother with all this chicanery for a small pay day when you could make more money by actually making the advertised product?

      The "value" wasn't in the product, it was in the buy out from Monster. Absent that, what they had was a start up not a "sure thing (tm)".

      This sort of thing is why finance is one of the most regulated industries on the planet, even if it doesn't always feel like that.

      1. katrinab Silver badge
        Meh

        Re: I don't get it...

        Yes, but why does Monster buy them out rather than launch their own product?

        Big Corporation buying out Startup does happen, but there has to be a good reason for it, unless the Big Corporation in question is called SoftBank.

        1. LucreLout Silver badge

          Re: I don't get it...

          Yes, but why does Monster buy them out rather than launch their own product?

          They don't, which is the scam part where the fools and their money were parted, albeit illegally.

          1. Michael Wojcik Silver badge

            Re: I don't get it...

            Exactly. It would make more sense for Monster or another larger company to buy an established player, if they're going to pay the sort of ridiculous premium that the scammers were claiming. Just one of the many red flags the article mentioned. But then there's never been a shortage of people ready to jump on an investment that's obviously implausible.

            1. Alan Brown Silver badge

              Re: I don't get it...

              "It would make more sense for Monster or another larger company to buy an established player"

              The "trick" is for the startup to run an advertising blitz so it becomes well-known for long enough that Monster buys it for the brand recognition just as the bills come due.

              It's been done on several occasions.

        2. chuBb. Bronze badge

          Re: I don't get it...

          Or HP(E)....

    7. This post has been deleted by its author

    8. ecofeco Silver badge

      Re: I don't get it...

      I was going to post exactly the same thing.

      They could have easily made the real product.

      1. Michael Wojcik Silver badge

        Re: I don't get it...

        They could have easily made it. They probably couldn't have easily sold it for a profit, because there are existing firms already in that market, the market appears to be small,1 and margins are likely poor.

        Hell, it's easy to make your own caffeine-enhanced chocolates, or have someone you know who enjoys making chocolates whip some up. If you're curious give it a try. Or just drink coffee while you eat your chocolates.

        You used to be able to buy caffeinated soap, too. (Caffeine is a small molecule that's readily absorbed through the skin.) For all I know that product is still available. It was never more than a novelty.

        1It's possible marketing and advertising could increase the size of the market; note the number of people posting here who claim they'd be interested in the product and were unaware similar ones are already available. But that's a very small sample and I'm dubious. It's easy to say "hey, I'd buy that!"; but when it comes down to actually seeking it out and making the transaction, how much would you actually buy?

        1. Kiwi Silver badge
          Gimp

          Re: I don't get it...

          Or just drink coffee while you eat your chocolates.

          You could also dunk/drop a chocolate bar into your coffee, or use chocolate milk, or.... :)

          You used to be able to buy caffeinated soap, too. (Caffeine is a small molecule that's readily absorbed through the skin.) For all I know that product is still available. It was never more than a novelty.

          There was/is one the Lynx gift boxes with a chocolate and a coffee body wash. It wasn't too bad either, though not something I'd buy myself. I did get some very funny looks when I told people I'd washed myself with chocolate.

          I doubt it had any enhanced cleaning or skin-care benefits, and while I did feel different to my normal soap after it, I think it's because it's something I did on special occasions[1] so added to the event. I suspect overall it was a marketing ploy aimed at the sort of chocoholic[2] who'd like to bathe in the stuff!

          Icon --> I hear a gimp suit goes well with full-body chocolate... I have weird friends..

          [1] I know many people who cannot grasp the concept of keeping some things 'special'. Even though we grew up very poor, we had some nice dinnerware and table stuff that only came out on birthdays and another set that only came out on Christmas day, These sorts of little things helped make special occasions that much more special, rather than just being any other day using any other ordinary things. Some people just have no smarts I guess.

          [2] Kinda surprised the spell check (NZ English) never even hinted at questioning this! I didn't realise we were so bad over here.

    9. bombastic bob Silver badge
      Unhappy

      Re: I don't get it...

      this is true - _I_ would want caffeinated chocolate, for SURE!

      I wonder if they hold a PATENT on the concept, with which they can TROLL LATER and effectively KEEP IT OFF OF THE MARKET... [unless it's purchased for a ridiculous price]

      1. gnasher729 Silver badge

        Re: I don't get it...

        Caffeinated chocolate is an idea, not an invention. Nothing that can be patented or protected. I’d say if there was money to be made, someone would have done it already. I conclude it’s not an idea that you can make money with.

        1. Kiwi Silver badge
          Pint

          Re: I don't get it...

          Caffeinated chocolate is an idea, not an invention. Nothing that can be patented or protected.

          Not looked around at patents much have you? There's lots of stuff that's just ideas. Also lots of patents on stuff that's both obvious and 'prior art'. People have tried to patent using lasers to entertain moggies (from what I see the person failed to pay filing fees thus the application was abandoned - see https://patents.google.com/patent/US5443036A/en). People have even tried to patent the stick! (https://www.cracked.com/article_15693_the-10-most-ridiculous-inventions-ever-patented.html

          I’d say if there was money to be made, someone would have done it already. I conclude it’s not an idea that you can make money with.

          I'm quite certain lots of firms do it, some without the chocolate (reminds me, need more Kopiko!). So much of it and for so long that even in the US I doubt one would get a patent for it.

    10. martinusher Silver badge

      Re: I don't get it...

      That's the idiotic bit.....if they had actually made some caffeine infused chocolate and it failed to sell then they could claim that they weren't defrauding anyone, they just were unlucky in business ("past performance is no guarantee of future earnings" disclaimer).

      (FWIW -- The Wehrmacht had something called "soldier's chocolate" in WW2 which was chocolate with added amphetamine. It was issued to officers who gave it out to soldiers in active combat as needed.)

      1. Michael Wojcik Silver badge

        Re: I don't get it...

        Really. They could have at least paid some firm to whip up a batch as "prototypes", to bolster their defense. But this doesn't look like a scam that was particularly well-planned. Maybe the older two were hoping it'd last until they died, leaving the younger one holding the bag. But my guess is they never bothered with contingencies or an exit plan.

  2. Gil Grissum

    Working and producing a viable product.

  3. Notas Badoff

    What a retirement party!!

    And now they're off to their retirement homes, with lots of stories of fun to tell the kids*

    * Not many of the other inmates will be 73 / 65 / 72 years old

    1. Anonymous Coward
      Anonymous Coward

      Re: What a retirement party!!

      You'd be surprised at just how many aged are banged up in the land of the free.

      1. Imhotep

        Re: What a retirement party!!

        I'd be surprised if these individuals are strangers to the legal system. Then again, given just how amateurish the whole setup was, maybe it was the hobby they decided to takeup after retirement. It seems the only exit plan was getting arrested.

        1. Mark 85 Silver badge

          Re: What a retirement party!!

          Maybe they wanted the free room and board and health care?

        2. vir

          Re: What a retirement party!!

          This is all part of the long con: selling their story to a film producer when they get out of prison and coasting on the residuals for the rest of their lives.

          1. Michael Wojcik Silver badge

            Re: What a retirement party!!

            Two of them are already in their 70s, and the young one is 67 now and looking at a 7-year sentence; even with the best of luck she's likely to be past her 70th birthday if and when she gets out. "The rest of their lives" may not be long enough to enjoy any notoriety.

  4. A Non e-mouse Silver badge

    Mercedes

    ..over $11,900 at a Mercedes dealership..

    What were they buying at a Mercedes dealership? It sure as hell wasn't a new car. (And with their lifestyle, I can't see them lowering themselves to get a second hand one)

    1. Dan 55 Silver badge

      Re: Mercedes

      If that figure isn't missing zero (or two) they're not doing it right.

    2. iron Silver badge

      Re: Mercedes

      I was going to suggest a new gear stick knob but then remembered Americans don't drive stick.

      Maybe an AMG branded air freshener?

      1. Chz

        Re: Mercedes

        I'm not going to defend the Americans' love of the automatic, but I will point out that very few Mercs in Europe sell with a stick shift either.

    3. Imhotep

      Re: Mercedes

      About right for leasing a car.

    4. katrinab Silver badge
      Flame

      Re: Mercedes

      I presume that they were sufficiently middle class to be allowed to own a flat screen television, so they had to move onto cars.

      Flat screen televisions are now the cheapest type of television available to buy. Likewise, you don't get much of a Mercedes for $11,900, but it is supposed to nevertheless sound like a big number.

      Cops mostly deal with dumb people who are too stupid to avoid getting caught. They assume everyone is dumb.

      1. Kiwi Silver badge
        Trollface

        Re: Mercedes

        Cops mostly deal with dumb people who are too stupid to avoid getting caught. They assume everyone is dumb.

        Is that along the lines of "thieves assume every one else is a thief", "liars assume every one else is a liar", us queers "assume every one else is curious" etc etc?

    5. Stoneshop Silver badge
      Trollface

      What were they buying at a Mercedes dealership?

      Just some chrome trim and a headlight.

    6. gotes

      Re: Mercedes

      Oil change.

    7. Alistair Silver badge
      Windows

      Re: Mercedes

      That would be the winter tires. It sure as hell wasn't the car.

    8. Michael Wojcik Silver badge

      Re: Mercedes

      Used Kia from the trade-in collection? "This Sorento has only 47,000 miles and comes with a license plate frame advertising our dealership!"

      1. Kiwi Silver badge
        Devil

        Re: Mercedes

        "This Sorento has only 47,000 miles and comes with a license plate frame advertising our dealership!"

        I've never understood people letting stealers advertise on their vehicles. Do they reduce the price or something for the priviledge of turning you and your wheels into a mobile billboard for them?

        The few cars I've had have come direct from the previous owner (actually the same for all but one of my bikes, and that was a parts bike), but if I ever was to buy from a stealer one thing I'd be making quite certain of... Any thing with your name on it is advertising which you will pay me for. Each item is at cost per week while the car is 'road legal' - registration holders $50, number plate surrounds $100/ea, company logo on glass other than front/rear windows, $500/ea, emblazoned across the rear window $1000, and visible on or through the front windscreen $10,000/wk. Don't want to pay, make it go away.

        Since I'm someone who likes few existing features in a car (preferring to bring my own stereo/speakers (last lot worth more than the car they're in) and I prefer to run my own circuits for 'extras' (rather than stuff hanging off inappropriate circuits in weird places), any car I buy is likely to be one they'd have a hard time moving anyway.

        Icon coz it does kinda look like a car...

        1. jtaylor

          Re: Mercedes

          "Any thing with your name on it is advertising which you will pay me for."

          I completely agree. However, when I inquired at a dealership, the salesman replied that the car was for sale in its current condition. Could he help me find another vehicle? If I really wanted modifications to that car, I should inquire with the service department.

          I bought from a dealership that advertises only on the licence plate frame. Problem solved.

  5. KittenHuffer Silver badge

    And now .....

    ..... they'll be wishing that they had made caffeine laced chocolate so that their time would pass 'faster'!

  6. KittenHuffer Silver badge

    Spiders on drugs!

    I always remember running across the story of spiders on drugs!

    https://en.wikipedia.org/wiki/Effect_of_psychoactive_drugs_on_animals

    Don't downvote me yet! This is relevant!

    It surprised me that the webs that were most fscked up were the ones where the spiders were on perfectly legal caffeine!

    1. Dz

      Re: Spiders on drugs!

      Cheers for the link. It looks interesting and i'm about to read. I downvoted you because you asked people not to though and because i'm a c**t.

      Sorry. :p

      1. Mephistro Silver badge

        Re: Spiders on drugs!

        Pro Tip: If you upvote a comment you have downvoted previously, the downvote is replaced by an upvote.

        Ta-daaaaa!!!!

        1. KittenHuffer Silver badge

          Re: Spiders on drugs!

          Love it! And you can keep on doing it!

          Hmmmm ...... time to write a script methinks!

          1. Mephistro Silver badge
            Devil

            Re: Spiders on drugs!

            You forgot the icon. I'll add it on your behalf. >>>>>>>>>>>>>>

      2. KittenHuffer Silver badge

        Re: Spiders on drugs!

        You're forgiven!

        I should have realised the reaction that comment would get from the commentards ..... but it is a Mongday morning, and I obviously haven't rebalanced my caffeine levels since the weekend. If only someone were to make a tasty treat that I could use to sort that first thing on a Mongday morning!

    2. Danny 2 Silver badge

      Re: Spiders on drugs!

      Everything is legal for spiders. They can bite you, lay eggs in you, even eat you, and there is no law against it. Plus how would you even get four pairs of handcuffs small enough for them?

      Me and my mate took a lot of magic mushrooms one year and I came across a spider doing something insane and impossible. I assumed I was hallucinating so I shouted for my pal and asked him to describe what the spider was doing, and he confirmed it.

      Death will be unlike a room full of spiders all clinging together and crying

      1. Danny 2 Silver badge

        Re: Spiders on drugs!

        I just got four upvotes for a post with a Momus link. I don't expect many of you know who that is, but most of you know who Neil Gaiman is. And you've maybe heard of Del Amitri.

        This is a cover version that has brightened up my day, for the four folk who upvoted me.

        https://www.youtube.com/watch?v=BVmrBMtKdFE

        Apologies to everyone else. But I don't need you.

        1. KittenHuffer Silver badge

          Re: Spiders on drugs!

          And maybe there's a lot of us who can read a website while w**king in the orifice, but can't get awake with watching videos while doing the same.

          Of course, if I was at home I'd be quite happy to watch a video while w**king away quite merrily!

    3. elkster88

      Re: Spiders on drugs!

      Now I really want to see this:

      2014 documentary Dolphins - Spy in the Pod shows dolphins getting intoxicated on pufferfish.

      Dolphin #1: "Can I tempt you with a bit of pufferfish?"

      Dolphin #2: "Thanks, I don't."

      1. Anonymous Coward
        Anonymous Coward

        Re: Spiders on drugs!

        Getting bladdered you mean....?

  7. Anonymous Coward
    Anonymous Coward

    The big question is...

    ...how much did HPE invest...?

    1. macjules Silver badge

      Re: The big question is...

      Too low on their scope: they would have given them $1Bn

    2. katrinab Silver badge

      Re: The big question is...

      And how much did SoftBank invest?

  8. TechnicalBen Silver badge

    Error.

    "The trio then variously splurged $39,000 on plastic surgery; over $209,000 on retail purchases, including jewelry, clothes, and interior decorating; over $11,900 at a Mercedes dealership; and hundreds of thousands of dollars on luxury housing."

    Two vital errors. They should have spent the budget on retail on the plastic surgery, and the plastic surgery budget on a fast car, then the housing on a tropical island... shure escape plan then!

    Greed and impulse are the demise to most scams... and most scammed.

  9. sbt Silver badge
    Paris Hilton

    That stock photo is oddly specific

    Not sure how El Reg found it, nor what the stock shop was thinking commissioning it.

    1. Anonymous Coward
      Anonymous Coward

      Re: That stock photo is oddly specific

      Stock photo places generally don't commission images - people send them in on spec. That particular photo could also make a point about dieting; being chained to habits etc, so it's not as weird as it may appear.

  10. Commswonk Silver badge

    WTF...

    From the article: The trio promised that any investments would be repaid in full if the product failed to sell, with five per cent interest for good measure, with Bershan guaranteeing the funds.

    That should have been more than enough to tell potential investors to stay away: it is impossible to get one's money back from an investment that fails to work.Suggesting that interest would be added compounds the deceit. If it were possible then the investment wasn't needed in the first place.

    Golden Rule: If something sounds too good to be true then it probably is.

    1. TechnicalBen Silver badge

      Re: WTF...

      Possibly part of the confidence trick. You only want easy/nutjob marks who know nothing, but trust everything.

      Strangely, it's reminding me of the attack on whales in the gaming publishing and other predatory industries.

      1. Imhotep

        Re: WTF...

        Trye. If you make the whole think so completely outrageous that only a dyed in the wool half wit could believe it, you don't waste your time on anyone that might ask questions.

        That's why the "Nigerian" scams work: anyone that actually responds has already passed the screening to weed out anyone with two brain cells to rub together.

        1. Dan 55 Silver badge

          Re: WTF...

          Spammers don't seem that clever themselves:

          This is what happens when you reply to spam email | James Veitch

    2. Kiwi Silver badge

      Re: WTF...

      That should have been more than enough to tell potential investors to stay away: it is impossible to get one's money back from an investment that fails to work.Suggesting that interest would be added compounds the deceit. If it were possible then the investment wasn't needed in the first place.

      It's not quite impossible. If that alone was the one flag I'd consider that they were putting the money into a decent interest-bearing account until they were ready to spend it (although at 5%, it's a litle high for NZ savings accounts!)

      There are some schemes that keep the money locked away safely until it's needed for spending, say someone is trying to perfect caffienated chocolate and will only spend the money when they've got the recipe down pat and are ready to buy plant/buildings etc as needed.

      Not all people seeking funding will blow it, some will return it if goals aren't met (eg I need $1,000,000 to get this building but only raise $900,457) or if something else goes wrong (I get offered my dream job and cannot be bothered making yet another chocolate factory/I win lotto and never need to work again)

      There's several other things that would've been a big red-flag to me, including the 'this is just a glimpse" pic from someone who has plenty of money from the description, and the interest rate would've raised questions, but a promise of a return would not be an issue on its own. Of course, I wouldn't have put my life-savings into something like that, regardless of the promised buy-out (and seeing enough of them go badly, that promised buy-out probably would've been a red-flag and maybe a deal-stopper for me!)

      1. MonkeyCee Silver badge

        Re: WTF...

        For me the obvious red flag is "why are they selling me anything?"

        If you have something that another person (Monster or Coke in this instance) will pay $23 for, why would you sell it for less? If you need funding to actually create the product, great. But then any buyout offer is bollocks.

        As for money refunding, I've given that promise to people giving me seed/angel capital. But as a personal guarantee to make them right, rather than part of the investment. I've certainly sold shares at $10 each that were later bought out for $100+, along with ones that ended up being worth $0.0001. I couldn't promise either result at the time. Certainly never sold shares for $3 that I was expecting to get $23 for....

        Plenty of investment schemes are just there to fleece people who are bad at math.

  11. lafnlab
    Pint

    Chocolates with caffeine already exist

    Awake Chocolate has been around for years now. and they really work. One time I made the mistake of eating four Awake Bites at work, and I didn't sleep at all that night. Since then I've learned to moderate my intake.

    Beer in lieu of coffee icon.

    1. Stoneshop Silver badge

      Re: Chocolates with caffeine already exist

      There's also Kopiko, coffee-based sweets. Available at almost any Asian foodstuffs store.

      1. Kiwi Silver badge

        Re: Chocolates with caffeine already exist

        There's also Kopiko, coffee-based sweets. Available at almost any Asian foodstuffs store.

        Yes! I love those! Been a while since I've had them and will have to get some more.

        One of the nicest wake-up-treats I know!

  12. Danny 2 Silver badge

    500 mg Guarana

    My Dutch ex fiancee used to feed me strong Guarana tablets and espresso for breakfast to undo the sleepiness her evil skunk had caused the previous night. I want to stress I was not driving to work.

    In Britain any employer would assume I was hungover, in the Netherlands they knew better.

    "Your eyes are very red"

    "I get bad hayfever"

    "Yes, the 'hay' is very strong here."

    As a teenager I used to take amphetamines to go out dancing.

    The Dutch are witty, but also incredibly rude. I know Dutch posters here, try to deny that. I was swapping out a server disk one night and a fellow engineer asked and then said, "Oh, we'll see."

    I was learning Dutch at night school and a receptionist said, "Don't learn Dutch, learn English."

    Scottish accent, they all learn English from BBC World Service which has a notable lack of Scottish accents.

  13. zb

    Some people are so stupid that I think maybe I should scam their money before someone else takes it. The thing that baffles me is how they ever managed to q accumulate quite so much money that they become fraud targets.

    1. Anonymous Coward
      Anonymous Coward

      Parents.

      Rags to riches and back again in 3 generations is a fairly well known saying.

  14. steviebuk Silver badge

    Sounds like...

    ...quite a lot of "Startups" on Kickstarter

  15. Blackjack Silver badge

    Are you saying the investors never ever went to a chocolate store in their lives?

    Coffee flavored chocolate is a thing that has existed for decades and yes it does have more caf than regular choco. Some brands are even sold anywhere you can buy chocolate bars.

  16. Doctor Syntax Silver badge

    "The trio promised that any investments would be repaid in full if the product failed to sell, with five per cent interest for good measure, with Bershan guaranteeing the funds."

    That should have been a warning. If the prospects were that good and they had the money to reimburse with interest why would they need to bring in external investors? If it's too good to be true ....

  17. Steve Crook

    You got my age wrong.

    I'm 63 not 73. Oh, wait...

    1. Imhotep

      Re: You got my age wrong.

      Steve, may I suggest you use a pseudonym for your nefarious activities?

  18. Kiwi Silver badge
    Headmaster

    Not quite true statement..

    ...“Schwartz lied about the readiness of his company’s products and about the claim that two large multi-national companies were vying to buy the company. Schwartz’s house of lies eventually collapsed, bringing financial devastation to many of its victims.”...

    Not quite true. Financial ruin came upon them when they over-invested in a single point of risk, rather than seeing what should've been many 'red flags' and if not run at least put the bulk of their money elsewhere.

    The "My parents never left me this" sort of thing should always be a red flag, at least to anyone who's ever had a close call with scAmway...

    "...To any sensible investor this would have been a Chinese military parade of red flags"

    Yoink!

  19. Alistair Silver badge
    Windows

    well -- at least they have one good thing going for them

    They weren't getting folks to invest in the product, and setup microtrading websites to recruit more investors to set up microtrading websites to recruit more investors......

    Although, that might have made it completely legal.

    (There needs to be a special form of perpetual torture for pyramid scheme marketroids.)

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