A federal grand jury has indicted Hank Risan, a 70-year-old resident of Santa Cruz, on four counts of wire fraud related to his software company Media Rights Technologies, Inc. (MRT), and his music streaming service, BlueBeat, Inc. Risan was arrested and made his initial appearance in federal court in San Jose.
The indictment alleges that Risan misled investors by making false claims about BlueBeat’s copyright ownership of approximately 2.5 million songs by well-known artists. He is also accused of providing misleading valuations for both MRT and BlueBeat, falsely claiming that a multi-national media conglomerate was about to acquire BlueBeat, and stating that a former undersecretary of the U.S. Department of Commerce was involved with the companies.
On November 3, 2020, Risan reportedly told investors he had “received a very favorable comparable regarding the BlueBeat Catalog” and added, “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!”
According to prosecutors, these representations were not true: BlueBeat did not own copyrights to the claimed catalog; valuations were fabricated; there was no pending acquisition; and the former Commerce official was not associated with the business.
Risan allegedly persuaded investors to buy around $1.96 million in stock or stock conversions and make payments labeled as loans. In total, he obtained about $3.17 million through this scheme. The indictment states that he used these funds for personal expenses such as credit card payments, purchasing collectibles, and paying his home mortgage.
United States Attorney Craig H. Missakian and FBI Special Agent in Charge Sanjay Virmani announced the charges.
Risan has been released on a $100,000 unsecured bond pending further proceedings. His next court appearance is scheduled for October 8 before U.S. District Judge P. Casey Pitts.
The indictment emphasizes that all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted on all counts of wire fraud under 18 U.S.C § 1343, Risan could face up to 20 years in prison per count and fines up to $250,000 each count. Sentencing would be determined by the court based on federal guidelines.
Assistant U.S. Attorneys Matthew Chang and Jeff Nedrow are prosecuting the case with assistance from Natachiana Burney and Susan Kreider following an FBI investigation.
