What’s going on?
Last week, Jennifer (Jen) Shah— a cast member of The Real Housewives of Salt Lake City— pled guilty to one count of conspiracy to commit wire fraud. Beyond the click bait-y headlines, there are some real takeaways about the legal weight of endorsements and understanding your rights as a consumer. But first, let’s back up.
For those who live under rocks like I do, The Real Housewives is a Reality TV franchise on Bravo that has many spin-offs in cities around the country. There’s The Real Housewives of Beverly Hills, The Real Housewives of Orange County, The Real Housewives of Potomac, The Real Housewives of Salt Lake City and on and on…. and on.
Fans of the Housewives will know that there’s been a general sense of confusion around how cast member Jen Shah got so wealthy— and that’s even been a plot line on the show. Before her arrest, she claimed that she spent $50,000 a month on her lavish lifestyle. And so naturally, the question is: how on earth can she afford that?
When asked about the source of her riches in an interview (pre-arrest), Shah said that she made her money from her digital marketing company, where she was— and I quote “the Wizard of Oz,” working “behind the curtain” of the operations. And anyone who knows The Wizard of Oz movie, knows the Wizard is actually a fraud… and as it turns out, so is Shah.
The crime.
Shah was arrested over a year ago with her assistant, Stuart Smith. At the time, there was compelling evidence that Shah and Smith had been targeting elderly Americans in a scam that had spanned six states over 10 years. According to legal documents, between 2012 and 2021, Shah and Smith defrauded hundreds of victims across the country, by selling those victims bogus business services in connection with the victims’ online businesses. CNN Business reported that the scammers sold website design services to some elderly individuals who didn’t even own computers.
The scammers lied to victims about how much they would earn after purchasing the business services and also lied about how successful the others who had purchased the services had been. CBS News cited statements from the DOJ describing how Shah controlled the day-to-day operations of the Manhattan sales floor between 2018 and 2020 and, alongside her colleagues, moved certain operations to Kosovo to avoid law enforcement and regulatory scrutiny.
The U.S. Attorney for the Southern District of New York Damian Williams said in a statement: “Jennifer Shah was a key participant in a nationwide scheme that targeted elderly, vulnerable victims. These victims were sold false promises of financial security but instead Shah and her co-conspirators defrauded them out of their savings and left them with nothing to show for it.”
When they were arrested in March 2021, both Shah and Smith pleaded not guilty. Shah was released on a $1 million personal recognizance bond, with a $250,000 cash security. Then in November 2021, Smith pled guilty and was sentenced to six years in prison. Even after Smith pled guilty, Shah asserted that she was innocent. And she continued to appear in Real Housewives of Salt Lake City, including a very cringe-y promo for the show where she said: “The only thing I’m guilty of is being Shah-mazing.”
But everything changed last Monday. Shah pled guilty to conspiracy to commit wire fraud and said the following in court: “From 2012 to March 2021 in the Southern District of New York and elsewhere I agreed with others to commit wire fraud. I did this by knowingly providing customer names to people who were marketing business services that had little or no value. I knew this was wrong. I know many people were harmed and I am so sorry.”
Shah’s sentence.
She was charged with one count of conspiracy to commit wire fraud, for which she faces a maximum penalty of up to 30 years in prison. We won’t know her sentence until November of this year, but according to Yahoo News, Shah’s plea agreement called for a sentence of anywhere between 11 to 14 years in prison. However, we already know the financial consequences: Shah will forfeit $6.5 million and pay restitution up to $9.5 million.
My two cents?
Sure, this case is a juicy takedown of a reality TV star who is often the butt of a joke, but because one highly-reported case so often opens the floodgates to others, I am really interested in how this case may pave the way for class-action lawsuits brought against celebrities that endorse phony products.
Celebrities hawk things on social media all the time, it’s a phenomenon I see a lot with crypto and beauty especially. For example, Kylie Jenner, Vanessa Hudgens, and Khloe Kardashian have all posted Instagram ads promoting Sugarbear hair vitamins, and imply they’ve used the vitamins themselves. However, the vitamins are not regulated or even approved by the FDA. And there’s actually some question as to whether the main ingredient in Sugarbear hair vitamins, biotin, actually makes a difference in your hair health. And, there have actually been reports of increased acne after using Sugarbear hair vitamins.
Here’s my takeaway: Shah’s case is an excellent reminder to always ask for a trial period before committing to a service. Just because a customer service rep didn’t explicitly offer you the option to take a product or service for a test drive, doesn’t mean you won’t get one if you ask. And, lastly, if it sounds too good to be true… it probably is.
xo,
