The U.S. Securities and Exchange Commission (SEC) and the U.S. Attorney’s Office for the Northern District of California charged the founder and CEO of California-based start-up YouPlus with defrauding investors by making false and misleading statements about the company’s finances and sources of revenue.
The charges allege that from 2018 to 2019, Shaukat Shamim (LinkedIn profile), the founder and CEO of YouPlus, a private company that purported to have developed a machine-learning tool to analyze videos on the internet, raised funds from investors while repeatedly misrepresenting the company’s financial condition.
Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. He allegedly provided investors with forged bank statements to conceal the fraud. The scheme unraveled in late 2019 when Shamim confessed to certain investors that YouPlus had in fact earned less than $500,000 and obtained only four paying customers from the company’s inception in 2013.
As we allege in our complaint, Shamim and YouPlus drummed up interest in the company by providing false information about its financial performance and customer base. Private companies engaged in early-stage fundraising must tell the truth when selling securities to investors.Erin E. Schneider, Director of the SEC’s San Francisco Regional Office
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges YouPlus and Shaukat Shamim with violating the antifraud provisions of the federal securities laws and seeks permanent injunctions, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against Shamim. In a parallel action, the U.S. prosecutor filed criminal charges against Shamim.