The lavish life of ‘Real Housewives’ star Jen Shah was funded by fraud, federal authorities allege

[Update: Court hearing for ‘Real Housewives’ star delayed after too many joined the videoconference]

On “Real Housewives of Salt Lake City,” star Jen Shah makes dramatic entrances in designer clothes, throws parties in her rented 9,420-square-foot home that’s been on the market for just shy of $4 million, and once estimated in a promotional video, “I probably spend $50,000 a month.”

Now, federal authorities allege she and her assistant/partner Stuart Smith “flaunted their lavish lifestyle to the public as a symbol of their success” as they ran a fraudulent telemarketing scheme that took advantage of hundreds of “vulnerable, often elderly, working-class people.”

Shah and Smith were arrested Tuesday in Salt Lake City and appeared in federal court on charges of conspiracy to commit wire fraud in connection with telemarketing, and conspiracy to commit money laundering. They were released under standard conditions, such as surrendering their passports and agreeing to not contact each other.

The alleged fraud often began with people who had initially invested in a purported online business opportunity with other participants in the scheme, according to the federal indictment, filed in the Southern District Court of New York.

Shah, Smith and their associates then sold those investors services that would make their business more efficient or profitable, “… including tax preparation or website design services, notwithstanding that many victims were elderly and did not own a computer,” according to the charges.

Shah and Smith “at no point” intended “that the victims would actually earn any of the promised return on their intended investment,” the charges said, and the victims did not “earn any such returns.”

[Read more: Jen Shah can be ‘terrifying,’ but she’s electric on ‘Real Housewives of Salt Lake City’]

The two “allegedly generated and sold lead lists of innocent individuals for other members of their scheme to repeatedly scam,” Manhattan U.S. Attorney Audrey Strauss said in a news release issued with the special agent in charge of the New York field office of Homeland Security and Dermot Shea, commissioner of the New York City Police Department.

The “so-called business opportunities pushed on the victims by Shah, Smith, and their co-conspirators were just fraudulent schemes, motivated by greed, to steal victims’ money,” Strauss said in the release.

Shea said there were “hundreds of victims” of the scheme, which the indictment alleges Shah and Smith had been participating in since 2012.

Shah and Smith, as seen on the show

Shah, 47, was one of six women who starred in the first season of “The Real Housewives of Salt Lake City,” and Smith — her “first assistant” — made several appearances on the show.

Shah was often at the center of the narrative of “RHOSLC,” feuding with other cast members, tossing insults and glasses at parties and talking about her depression, which she attributed to her father’s death and the job-related absences of her husband, University of Utah assistant football coach Sharrieff Shah. Shah, who is Tongan and Hawaiian, also talked frequently about the difficulties she encountered growing up in predominantly white Utah.

According to a Bravo spokeswoman, the network has no comment on Shah’s arrest. Although there are reports that Shah has begun filming for Season 2 of “RHOSLC” — and that law enforcement came looking for Shah during shooting on Tuesday — Bravo has not confirmed who will be in the second-season cast.

Shah has her own marketing firm as well as JXA Fashion and Shah Lashes, and she recently launched Shah Beauty, described as “skin care for the modern woman.”

Smith, 43, of Lehi, was seen driving Shah in a Porsche on the show, helping her plan parties and debating lunch choices — once advocating for a stop at a Harmons grocery store.

They have each been charged with one count of conspiracy to commit wire fraud in connection with telemarketing through which they victimized 10 or more persons over age 55, which carries a maximum sentence of 30 years; and one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years.

The indictment also said authorities will seek real property and personal property that was used to facilitate the crimes or that can be traced to proceeds from the crimes, including the property at 3241 N. 700 West in Lehi.

‘Leads to be bought and sold’

The charges allege Shah and Smith sold lists of “leads” that had been generated from “sales floors” in places that include Utah, Arizona and Nevada. The owners of those sales floors allegedly “operated in coordination with several telemarketing sales floors in the New York and New Jersey area … and provided lead lists and assistance in fighting victim refund requests” from victims of the fraud.

Shah and Smith “objectified their very real human victims as leads to be bought and sold, offering their personal information for sale to other members of their fraud ring,” Homeland Security Investigations (HSI) Special Agent in Charge Peter C. Fitzhugh said in the Tuesday news release.

Shah and Smith “undertook significant efforts to conceal their roles” in the scheme by incorporating their businesses using third parties’ names, and they instructed other participants to do the same, the charges said.

They also used “encrypted messaging applications to communicate with other participants”; instructed them to send fraud proceeds to offshore bank accounts; and “made numerous cash withdrawals structured to avoid currency transaction reporting requirements,” the charges said.

In court Tuesday, Shah and Smith were not asked to enter pleas and the prosecution did not ask that they be detained. Instead, prosecutors asked for typical release conditions for them — they must appear at all hearings, cannot have contact with each other, cannot commit new crimes and agree to restrict their travel, including surrendering their passports and not traveling outside of Utah except to New York for further court hearings.

The prosecution also wanted an order that the two “not dissipate cash or assets” or “spend any money from personal or company accounts” in excess of $10,000, except to pay for lawyers. Lawyers for Shah and Smith challenged the $10,000 limit, but Magistrate Dustin B. Pead entered the requested order and Shah and Smith agreed to the conditions.

The judge said they can petition to have the case transferred to Utah — but only if they plead guilty.

Shah and Smith “flaunted their lavish lifestyle to the public as a symbol of their success,” while they “allegedly built their opulent lifestyle at the expense of vulnerable, often elderly, working-class people,” Fitzhugh said in the release, adding that if convicted, the two “will answer for their crimes” and “as a result, their new reality may very well turn out differently than they expected.”