The Securities and Exchange Commission (SEC) sued tech start-up YouPlus, Inc. and its CEO Shaukat Shamim for fraudulently raising roughly $11 million from investors after sharing “misleading statements about the company’s financial results and future prospects.” Shamim is accused of telling investors that a distinguished venture capital firm had pledged to lead a round of financing and overstating the number of YouPlus users. This case, filed on Monday, is held in the Northern District of California.
The SEC claims that between 2018 and 2019 YouPlus made approximately $11 million under allegedly false pretenses from about 30 investors. While pitching to new investors, Shamim is said to have misrepresented the company’s financial results and prospects. In several instances, he sent emails to investors with baseless projections for millions of dollars in revenue expectations. He allegedly sent multiple false revenue statements to investors featuring numbers like $4.6 and $3.97 million while referencing the same time period in 2018.
Shamim is also accused of telling at least one investor in April 2019 that “YouPlus had secured a commitment from a prominent Silicon Valley investor to invest $3-4 million in YouPlus’s Series A financing.” However, the investor allegedly invested only $500,000 around May 2019. Shamim allegedly conceded his financial misrepresentations to investors several times beginning in October 2019. The complaint writes, “Shamim agreed that YouPlus had exaggerated its historical revenues and customer traction, and conceded that he ‘got ahead of [himself],’” and that when asked if he had attempted to persuade investors with false statements Shamim responded that he “‘probably’ had.”
Founded in 2014, YouPlus is a California-based technology innovation company that developed the first Video Opinion Intelligence Engine (VOISE), “an advanced AI and Machine Learning platform to unlock consumer opinions and experience insights from videos,” according to its LinkedIn page. As a result of YouPlus and Shamim’s allegedly misleading statements, the SEC seeks orders enjoining them from further violations and requiring them to “disgorge all ill-gotten gains or unjust enrichment.”