Santa Cruz man accused of music streaming and wire fraud charges; U.S. Attorney’s Office
SANTA CRUZ, Calif. (KION-TV) - A man is being indicted on four counts of wire fraud stemming from alleged misrepresentations of his software company and music streaming service.
According to the Northern District of California, 70-year-old Hank Risan was arrested Tuesday morning before making his initial court appearance in San Jose.
The indictment was filed on July 31 and unsealed August 5, claiming that Risan of Santa Cruz allegedly sold stock and stock conversion in his software company, Media Rights Technologies, Inc. (MRT), as well as his music streaming service, BlueBeat, Inc., according to the Northern District of California.
The U.S. Attorney's Office saying that investors were told false claims of BlueBeat’s copyright ownership of approximately 2.5 million songs by various well-known artists; false and misleading comparisons and valuations of BlueBeat; false claims of imminent acquisition of BlueBeat by a multi-national media and entertainment conglomerate; and false claims of association and involvement with the companies by a former undersecretary of the U.S. Department of Commerce.
They say that an example of this came from November 3, 2020 when Risan told investors that he “received a very favorable comparable regarding the BlueBeat Catalog” and noted, “To put that news in perspective, BlueBeat contains approximately 2.5 million songs and $10K per song brings music to my ears. You can do the math!”
The indictment alleges that BlueBeat did not own the copyrights to the 2.5 million songs, the valuations of MRT and BlueBeat were fictional, the advertised multi-media conglomerate was not in the process of acquiring BlueBeat or its catalog, and the former Commerce official was not involved with BlueBeat.
According to Northern District of California, "Risan allegedly induced investors to purchase approximately $1,959,187 in stock and stock conversions, and to make payments characterized as 'loans.'”
The U.S. Attorney's Office saying that, in total, Risan got approximately $3,165,859 from the charged scheme and allegedly used the fraudulently obtained funds to pay personal credit cards, purchase collectables, and make mortgage payments on his personal residence.
Risan was then released on a $100,000 unsecured bond with his next district court appearance expected to be on October 8.
If convicted, the Attorney's Office says that the defendant faces a maximum sentence of 20 years in prison and a fine of $250,000 for each count of wire fraud.
The prosecution is the result of an investigation by the FBI.
