San Francisco – Silicon Valley Start-Up Founder Sentenced to 2.5 Years in Prison for Securities Fraud
Shaukat Shamim, 53, of Santa Clara, California, was sentenced to 30 months in federal prison for his scheme to defraud investors into investing in the technology start-up he founded and led, announced Acting United States Attorney Patrick D. Robbins and FBI Special Agent in Charge Sanjay Virmani. The sentence was handed down April 7, 2024, by the Hon. James Donato, U.S. District Judge.
Shamim pleaded guilty to the charges on September 16, 2024. According to agreed facts in the plea agreement, Shamim founded Silicon Valley-based YouPlus in 2013. By 2015, the focus of YouPlus was to develop software tools to analyze online video content. From its inception until Shamim resigned from the company in November 2019, YouPlus raised approximately $17 million from investors, including angel investors and venture capital firms.
Shamim admitted that he made false representations to investors and potential investors about YouPlus’s product, sales, and customer adoption. Shamim told investors that YouPlus had developed a search engine that used neural networks to analyze videos and predict marketing outcomes despite knowing that YouPlus had not, in fact, developed software with fully operational artificial intelligence functionalities.
Shamim also admitted to investors and prospective investors about YouPlus’s revenue and customers. Shamim admitted that, in August and September 2018, he prepared and provided to prospective investors documents that claimed that YouPlus had customers who had signed up for continuing services and paid recurring subscription fees. In fact, no customers had signed on to pay monthly fees for the service.
Shamim provided some victims a spreadsheet that showed 90 customers were paying a total of $600,000 per month. Nevertheless, in reality, every one of the purported customers were paying for YouPlus subscriptions and YouPlus had only ever earned minimal revenue—less than $200,000 total—working on small and non-recurring projects.
By September 2019, YouPlus was running short on cash and Shamim was seeking to raise money for YouPlus in a Series A financing from venture capital investors. During the same time period, Shamim, also sought bridge loans from existing investors to cover YouPlus’s costs. Shamim admitted that, in response to requests and to conceal the fact that he had previously provided false information about YouPlus revenue, Shamim altered bank statements for YouPlus’s bank accounts in India and the United States.
Shamim altered a statement for an account YouPlus held at a U.S. bank so that it showed totaling over $600,000 from 35 different companies, including Coca-Cola, Kraft, and Netflix. The deposits did not actually exist. The true bank statement for that month reflected only one $65,000 customer deposit. Shamim also admitted to forging or altering contracts purporting to show subscription agreements between YouPlus and purported customers.
Shamim admitted that, from August 2018 through October 2019, he made false representations to investors and potential investors about YouPlus’s product, sales, and customer adoption. Shamim admitted that he raised approximately $17 million from investors, including angel investors and venture capital firms, through his scheme.
Shamim was sentenced to 30 months in federal prison for his scheme to defraud investors into investing in the technology start-up he founded and led.
Related Federal Cases
- Sushovan Hussain, Conspiracy, Wire Fraud, Securities Fraud, California 2018 · California
- Manish Lachwani, Wire and Securities Fraud, California 2024 · California
- Manish Lachwani, Wire Fraud, Securities Fraud, California 2023 · California
- Kalistratos Kabilafkas, Securities Fraud, California 2023 · South Carolina
- Tamara Yvonne Motley, Medicare Fraud, California 2023 · California
Key Facts
- State: California
- Category: White Collar Crime
- Source: DOJ Press Release â†â€â€
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