Quick Take
Hank Risan, 70, faces four counts of wire fraud for allegedly misrepresenting the value of his music streaming company to bilk investors out of more than $3 million, according an indictment handed down by a federal grand jury this week.
The founder of a Santa Cruz music tech company was arrested this week following a federal grand jury indictment and FBI investigation.
Hank Risan, 70, faces four counts of wire fraud for allegedly misrepresenting the value of his music streaming company to bilk investors out of more than $3 million, according to the indictment.
In a media release, the U.S. Attorney’s Office for the Northern District of California accused Risan of exaggerating to investors the value of his two companies — Media Rights Technologies, Inc., a software company, and BlueBeat, Inc., a music streaming service.
Risan’s alleged misrepresentations led investors to purchase nearly $2 million in stock and stock conversions, and to make “loan” payments, investigators say. Risan allegedly earned more than $3 million from the scheme.
According to the indictment, Risan misrepresented BlueBeat’s value, told investors his company owned the copyright to 2.5 million songs, claimed that a “multinational media and entertainment conglomerate” would acquire the company imminently, and stated that an unnamed “former undersecretary of the U.S. Department of Commerce” was involved in the company. Prosecutors said Risan’s valuation of the two companies was “fictional,” and that no federal official was associated with the companies.
Risan allegedly told investors in November 2020 that “BlueBeat contains approximately 2.5 million songs and $10K per song brings music to my ears. You can do the math!”
Investigators say that the more than $3 million that Risan obtained from investors was used to make payments for personal credit cards, purchase collectibles and pay his mortgage.
The indictment was filed on July 31. Risan was arrested and made his first appearance in federal court in San Jose on Tuesday. He has since been released on a $100,000 unsecured bond and is scheduled to next appear in a district court in early October.
If convicted, Risan could face upward of 20 years in prison and a fine of $250,000 for each count of wire fraud. Michelle Lo of of the U.S. Attorney’s Office declined to share information about whether there are other legal proceedings underway against the other employees of both companies.
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