AUSTIN (KXAN) --- The founder and executive chairman of a beverage company appeared in court for lying to solicit investments, according to U.S. Attorney Philip R. Sellinger.
Todd O'Gara was charged by complaint with one count of wire fraud. O'Gara founded the beverage company, Wanu Water, Inc., which is headquartered in Austin.
According to court documents, he raised at least $3.4 million dollars from individual victim investors. It alleges he repeatedly lied to get those investments and to encourage victims to maintain their investments.
"Among other things, O'GARA lied to investors about his education and professional
credentials, about retailers' purchase orders for Wanu, and about interest and
commitments from other individual and institutional investors," a press release said.
In a statement sent to KXAN, O'Gara said, "I unequivocally deny the charges and look forward to being cleared from all allegations."
US Attorney for the District of New Jersey Philip Sellinger said he could not speak about this specific case with Wanu, but said these cases are not uncommon.
"We're seeing a substantial increase in this kind of fraud, in other frauds as well."
U.S. Attorney for the District of New Jersey Philip Sellinger
Sellinger said it is important for investors to do their due-diligence when putting money towards any company.
"Some of the biggest red flags we see in these cases," Sellinger said. "Returns that are too good to be true. If the returns are too good to be true, they're probably not true."
The Better Business Bureau (BBB) recommended asking a company for the right documents.
"You definitely want to ask for a prospectus or offering circular. This is going to have details on their financial performance. It will have a listing of who their team is, any risks that are involved with that investment," said BBB Director of Education and Community Engagement Katie Galan.
Galan suggested going over documents with a financial expert and verifying what the company sends you.
"Go to another resource. Go to official documents with the state or county," Galan said. "Wherever that information should be coming from, and you can verify it with."
The affidavit said Wanu Water was sold in brick-and-mortar retailers and online, but was losing money every year.
"As of in or around September 2019, Wanu was projecting losses of approximately $3.77 million dollars for the 2019 calendar year," court documents said.
According to those documents, O'Gara started looking for additional money from outside investors, including institutional investors and individuals.
One of the victims was introduced to O'Gara by a friend. The affidavit claimed the victim and O'Gara started talking about an investment into the company.
"During conversations with Victim-1, O'GARA stated that Wanu had recently been valued by outside investors at approximately $30 million," the documents stated.
In 2019, that person purchased stock in Wanu and wired $250,000 to a company bank account. However, the investments wouldn't stop there. According to the affidavit, O'Gara asked that investor for an approximately $50,000 loan to complete a production run.
"Before the $50,000 wire from Victim-1 was credited to Bank Account-1, the account had an approximately $1,729.59 deficit," the affidavit said.
That same person made two additional investments for $55,000 and $100,000, according to court documents.
In 2020, O'Gara emailed a second victim about an investment into the company. According to the affidavit, O'Gara sent forged documents that falsely claimed information about a pre-investment valuation of Wanu.
Among some of the alleged false claims was that a private equity firm was 'courting' Wanu. According to the affidavit, O'Gara claimed that if Wanu were acquired, individuals that invested would make close to $10 million on their investment.
The second victim sent two wires for approximately $250,000 each to Wanu.
According to court documents, one victim and others in their family made several investments from 2019 to 2021 that totaled approximately $857,000.
"During this period, O'Gara made several misrepresentations to Victim-3, including
misrepresentations about an investment from PE Firm-1 and purchase orders from
Retailer-1," the affidavit said.
The wire fraud charge O'Gara faces carries a maximum penalty of 20 years in prison and a maximum fine of $250,000.
