A federal grand jury has indicted a Santa Cruz man on four counts of wire fraud stemming from alleged misrepresentations to investors about his software company and his purported music streaming service. Hank Risan was arrested Tuesday morning and made his initial appearance later in the day in federal court in San Jose.
According to the indictment filed on July 31, and unsealed Aug. 5, Risan, 70, allegedly offered and sold stock and stock conversion in his software company, Media Rights Technologies, Inc., and his music streaming service, BlueBeat, Inc., to investors based on false representations, including:
- 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
- False claims of association and involvement with the companies by a former undersecretary of the U.S. Department of Commerce.
As an example, prosecutors said that on Nov. 3, 2020, Risan informed 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!”
In reality, the indictment alleges, 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.
Risan allegedly induced investors to purchase approximately $1,959,187 in stock and stock conversions, and to make payments characterized as “loans.” In total, he obtained approximately $3,165,859 from the charged scheme. Risan allegedly used the fraudulently obtained funds to pay personal credit cards, purchase collectables, and make mortgage payments on his personal residence.
United States Attorney Craig H. Missakian and FBI Special Agent in Charge Sanjay Virmani made the announcement.
Risan was released on a $100,000 unsecured bond. He is next scheduled to appear in district court in San Jose on Oct. 8, for a status conference before U.S. District Judge P. Casey Pitts.
If convicted, Risan faces a maximum sentence of 20 years in prison and a fine of $250,000 for each count of wire fraud.
