Money Rehab with Nicole Lapin - Jen Shah Pled Guilty to Fraud. Who's Next?

Episode Date: July 18, 2022

After over a year of constant denial, Real Housewives of Salt Lake City cast member Jen Shah pled guilty to fraud. Nicole shares details on Shah's terrible scam, potential sentence and which celebrity may fall next. 

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The only financial expert you don't need a dictionary to understand. The cold lappin'. Last week, news broke that 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 clickbaity headlines and the page six coverage, 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 spinoffs in different cities around the country. There's The Real Housewives of Beverly Hills, The Real Housewives of Orange County, The Real Housewives of Potomac, and so on and so on. Of all of the spinoffs,

people are the most confused about why Salt Lake City got a Real Housewives show. But I digress. Fans of the Housewives will know that there has 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, Shah said that she made her money from her digital marketing company, where she was, quote, the Wizard of Oz, working behind the curtain of the operations. And anyone who knows the Wizard

of Oz movie knows that the wizard is actually a fraud. And as it turns out, so is Shaw. Shaw was arrested over a year ago with her assistant, Stuart Smith. At the time, there was compelling evidence that Shaw and Smith had been targeting elderly Americans in a scam that spanned six states over 10 years. According to legal documents between 2012 and 2021, Shaw and Smith defrauded hundreds of victims throughout the United States by selling those victims so-called business services in connection with the victims' purported online businesses. The U.S. Attorney for the Southern District of New York, Damian Williams, said in a statement, quote, Jennifer Shaw was a key participant in a

nationwide scheme that targeted elderly vulnerable victims. These victims were sold false promises of financial security, but instead Shaw and her co-conspirators defrauded them out of their savings and left them with nothing to show for it. This office is committed to rooting out these schemes, whatever form they take. Shaw was released on a million-dollar personal recognizance bond with a $250,000 cash security. According to reporting from Time, Shaw and her assistant's telemarketing scheme worked like this. Shaw and Smith would identify people who they thought would be easy targets for a scam, many of whom were older, and then they sold the lists of these targets to scammy businesses. CBS News provided more detail and reported that many of the victims on these, quote, lead lists had previously made an initial investment to create an online business with other participants in the scam.

Shaw is accused of selling leads to the scammers for use for their telemarketing with the knowledge that the individuals they had identified as leads would be defrauded. they had identified as leads would be defrauded. CNN Business reported that the scammers sold website design services to some elderly individuals who didn't even own computers. The scammers lied to the 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 also cited statements from the DOJ describing how Shaw 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. When they were arrested in March of 2021,

and regulatory scrutiny. When they were arrested in March of 2021, both Shaw and Smith pleaded not guilty. But in November of 2021, Smith pled guilty and was sentenced to six years in prison. Even after Smith pled guilty, Shaw asserted that she was innocent. And she continued to appear on The Real Housewives of Salt Lake City, including in a very cringy promo for the show where she said, the only thing I'm guilty of is being shamazing. But everything changed on Monday. Shaw said the following in court, quote, 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, end quote. 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. The judge, of course, will determine her sentence, but we do know now the financial consequences. Shaw will forfeit $6.5 million and pay restitution of up to $9.5 million. An attorney for Shaw told People magazine, quote, Ms. Shaw is a good woman who crossed the line. She accepts full responsibility for her actions and deeply apologizes to all who have been harmed. Ms. Shaw is also so sorry for disappointing her husband, children, family, friends, and supporters. She pled guilty because she wants to pay her debt to society and put this

ordeal behind her and her family, end quote. 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 up the floodgates to the others, I am really interested in how this case may pave the way for class action lawsuits brought against celebrities that endorse products. We all know this. Celebrities hawk all sorts of things on social media all the time. And it's a space especially icy a lot with crypto and beauty. For example, Kylie Jenner, Vanessa Hudgens, and Khloe Kardashian have all posted Instagram ads promoting sugar bear hair gummies and imply that they've used the gummies themselves. However, the gummies are not regulated or even approved by the FDA,

and there's actually some question as to whether or not the main ingredient in sugar bear hair gummies actually makes that big of a difference in your hair health. And there have also been some reports, by the way, of increased acne after using said gummies. For today's tip, you can take straight to the bank. Shaw's case is an excellent reminder to always ask for a trial period before committing to a service. And if you don't like it, don't forget to cancel. Just because a customer service rep didn't explicitly offer you the option to take a product or service for a spin doesn't mean you won't get one if you ask. And lastly, if it sounds too good to be true, it probably is. Money Rehab is a production of iHeartRadio. I'm your host,

Nicole Lappin. Our producers are Morgan Lavoie and Mike Coscarelli. Executive producers are Nikki Etor and Will Pearson. Our mascots are Penny and Mimsy. Huge thanks to OG Money Rehab team Michelle Lanz for her development work, Catherine Law for her production and writing magic, and Brandon Dickert for his editing, engineering, and sound design. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.