Tech CEO convicted in $2M Ponzi scheme, COVID loan fraud
Tech CEO convicted in $2M "smart ring" Ponzi scheme
Former tech executive Michelle Bisnoff (also known as Michelle Silverstein) has been convicted by a federal jury in Santa Ana on 16 counts, including wire fraud and securities fraud, for running a near-$2 million Ponzi scheme. Bisnoff, the former CEO of Esos Rings Inc. and a former Brentwood council chair, stole smart ring payment technology patents from a former employer using a forged signature. She then duped investors by fabricating major business partnerships with companies like Apple, Virgin Mobile, and Roc Nation.
LOS ANGELES - The founder of Esos Rings, Inc. has been found guilty by a federal jury on multiple fraud, money laundering, and identity theft charges after falsely claiming ownership of patented smart ring technology to orchestrate a near-$2 million Ponzi scheme and fraudulently obtaining COVID-19 relief funds, the U.S. Department of Justice announced on Thursday.
What we know:
A federal jury found Michelle Bisnoff, 59, guilty of six counts of securities fraud, six counts of wire fraud, two counts of money laundering, one count of wire fraud tied to a COVID-relief loan, and one count of aggravated identity theft.
The verdict followed a seven-day trial detailing how Bisnoff, who was originally hired by United Kingdom-based McLear Ltd. to develop the U.S. market for its patented near-field communication payment rings, used a falsified patent assignment to claim the technology as her own.
She subsequently established Esos Rings Inc. to market smart rings based on the stolen IP and solicited funds from prospective investors under false pretenses.
To lure investors, Bisnoff falsely claimed Esos was highly profitable and actively expanding its manufacturing footprint to supply major retailers, including Target and Walmart.
Officials said she touted fictitious capital injections from high-profile backers such as Apple Inc. and Roc Nation, while asserting she was on the verge of a licensing deal with Middle Earth Enterprises.
But in reality, Esos maintained minimal business revenue, held no contracts with Target, sold only six rings via Walmart.com with half of those being returned, and never finalized arrangements with Apple, Roc Nation, or Middle Earth Enterprises, officials said.
Bisnoff provided investors with forged financial statements, a falsified corporate tax return, and a fraudulent patent valuation that were never drafted or verified by the listed professionals.
In addition to the investment fraud, Bisnoff used the alias Michelle Silverstein in March 2020 to apply for a $150,000 Economic Injury Disaster Loan intended for pandemic relief.
She inflated the revenue figures and improperly funneled the federal loan funds into personal living expenses, including paying $15,600 monthly rent for a residence in Pacific Palisades, officials said.
Overall, Bisnoff fraudulently obtained nearly $2 million from investors and inflicted approximately $1.4 million in total losses, using much of the money for personal expenses and Ponzi-style payouts to earlier investors.
What we don't know:
The court has not yet determined the exact restitution order or the final length of the prison sentence that will be imposed.
It's also unclear if federal authorities will be able to recover any assets to compensate the victims, as court records indicate neither Bisnoff nor Esos has paid any portion of the $836,548 SEC judgment issued against them in September 2023.
What they're saying:
During trial proceedings, victim testimony shed light on the stall tactics Bisnoff used when promised returns failed to materialize, with one victim characterizing her explanations as "dog-ate-my-homework" excuses.
According to the Justice Department, when pressed by investors, Bisnoff even attempted to embezzle roughly $550,000 from a separate employer to cover investor payouts before ultimately issuing checks that bounced.
What's next:
Bisnoff's sentencing hearing is scheduled for January 21, 2027.
She faces a statutory maximum penalty of 20 years in federal prison for each count of securities fraud and wire fraud, up to 10 years for each money laundering count, and a mandatory two-year consecutive sentence for the aggravated identity theft charges.
The Source: This report is based on official trial evidence, court documents, and public announcements released directly by the United States Department of Justice following the conclusion of a seven-day federal criminal trial. The underlying investigation was conducted jointly by the FBI and the U.S. Small Business Administration Office of Inspector General, with investigative and prosecutorial assistance provided by the Securities and Exchange Commission and the U.S. Attorney's Offices for the Central District of California and the Southern District of Florida.