6 days ago
- Business
- San Francisco Chronicle
Santa Cruz media technology founder arrested, indicted on wire fraud charges
A federal grand jury has indicted a Santa Cruz media technology company founder for allegedly misleading investors into sending over $3 million to support the owner's music streaming and software companies.
Authorities arrested Hank Risan, 70, on Tuesday morning on four counts of wire fraud charges, according to a statement from the U.S. Attorney's Office. Risan is accused of falsely claiming his music streaming company, BlueBeat, Inc., held copyrights for nearly 2.5 million songs by several high-profile artists and misrepresenting the valuations of BlueBeat and its parent company, Media Rights Technologies, Inc.
The indictment alleges Risan lied to investors by saying a multi-national media and entertainment conglomerate was on the verge of acquiring his company when no process had begun. Prosecutors said he told investors: 'BlueBeat contains approximately 2.5 million songs and $10k per song brings music to my ears. You can do the math.'
Federal prosecutors also allege that Risan's claim that a former U.S. Department of Commerce undersecretary was involved with both companies was a lie.
These misrepresentations helped entice investors to buy nearly $3.2 million in 'payments characterized as 'loans,'' stock and stock conversions, federal prosecutors said.
Risan used the funds to pay credit card bills, mortgage payments and buy 'collectables,' prosecutors said.
Risan made his first appearance in federal court in San Jose on Tuesday and was released after paying a $100,000 bond. His next court date is set for Oct. 8.
When reached by phone, Risan did not provide a comment on the case.
Risan could face up to 20 years in prison and a fine of $250,000 for each count of wire fraud if convicted. His maximum sentence would be 80 years in prison and a $1 million fine.
In 2009, six record companies sued Risan and his companies for alleged copyright infringement. The complaint zeroed in on BlueBeat's sale of the then newly released Beatles remastered box set for up to $4 per album. The lawsuit says, 'It is well-known throughout the music and business community that the Beatles catalog has never been released for digital download.'
