Vegan Fraudster Jailed On Rikers After Elaborate Multi-Million Dollar Scam

CHELSEA, NY — A fraudster who scammed investors in her vegan business out of hundreds of thousands of dollars has has started serving a four month sentence on Rikers Island as part of a plea deal, prosecutors said.

Sarma Melngailis and her husband Anthony Strangis were arrested last year and charged with stealing from their employees, skipping out on taxes and defrauding investors in a chain of trendy vegan businesses, Brooklyn prosecutors said at the time.

Melngailis entered Rikers on Wednesday. Her husband, Strangis, was sentenced to time served. He's been behind bars on Rikers for a year.

The couple's fraud was elaborate and extensive, prosecutors said. Melngailis first opened Pure Food & Wine in Chelsea in 2004, later adding the One Lucky Duck juice bar in Gramercy in 2010. By 2012, she had added a food production center in Brooklyn to her business. She focused on serving raw, vegan meals. (Want more local news? Subscribe here for free breaking news alerts, features, neighborhood updates and more from Patch.)

In 2013, prosecutors say Strangis became a regular fixture at the company, but Melngailis didn't introduce him to staff and colleagues as her husband. The two created an alias, "Shane Fox," for Strangis under which he worked for One Lucky Duck LLC, authorities said.

Shortly after "Shane" joined the business, extensive fraud began, according to the couple's original indictment. In 2014, Melngailis transferred more than $1.6 million from business accounts to her personal bank account. The couple spent that money at casinos, on Rolex watches, on luxury hotels in Europe and on a $10,000 bill for Uber car rides.

During this elaborate spending spree, employees at One Lucky Duck stopped getting paid. Prosecutors said workers went without paychecks in April, May, July, August and November of 2014. In January 2015, employees' paychecks bounced and they left the business, forcing the storefronts to close.

Melngailis wasn't quite done, however. She told investors that she had borrowed money from her companies to pay for healthcare for her ailing mother, prosecutors said. She used $844,000 in new investments to pay back employees and settle bills, and in April 2015 re-opened the Chelsea restaurant, according to the indictment.

She then created a second alias for her husband, "Michael Caledonia," who she presented to investors as a wealthy businessman looking to buy the company outright. Once an investor discovered that Mr. Caledonia was actually Strangis, the couple shuttered their businesses and went on the lam in 2015 before being arrested in Tennessee last year.

Detectives found the couple thanks to a tip that a decidedly non-vegan Domino's pizza had been delivered to their hotel room.

As part of Melngailis's guilty plea, she admitted to the indictment's top count, stealing $200,000 from one investor.

Lead image credit: Paul Hawthorne / Staff / Getty Images Entertainment. Photo caption: : Author Sarma Melngailis attends the launch of her new book 'Raw Food Real World' at Pure Food and Wine July 18, 2005 in New York City.