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 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. He allegedly claimed that he owned 2.5 million songs by various well-known artists worth $10,000 each.
In reality, the indictment alleges, BlueBeat did not own the copyrights.
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.
In 2014 Risan was sued by the Beatles’ record label EMI for copyright infringement when he posted his own soundalike versions of Beatles songs online selling them for 25 cents each. He was forced to take them down and pay almost $1 million in fines.
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.
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