The CEO of a “smart ring” allowing for financial transactions was convicted Thursday, Sept. 24 of a Ponzi and fraud scheme.
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Michelle Bisnoff was convicted of a wide range of fraud charges in a 22-count indictment at a trial in a Santa Ana federal courtroom on Thursday.
Bisnoff worked for John McLear, who invented the technology that embeds credit card information into a wearable ring, federal prosecutors said in a trial brief. Bisnoff was hired in March 2016 to help with marketing and branding for the new company selling the rings, prosecutors said.
After Bisnoff was fired in October 2016, she “devised a scheme to claim McLear US’s patent and start her own company, called Esos Rings,” prosecutors said.
Bisnoff incorporated her company Feb. 1, 2017, and fraudulently claimed to have the inventor’s patent, prosecutors said. To claim the patent, she used the signature of the man who hired her.
Bisnoff lied to investors to obtain more than $2 million for the company, prosecutors said.
Bisnoff did make payments to some investors, “but these were Ponzi payments funded by money obtained from other investors, not by a capital investment from Virgin Mobile/Sprint,” which she falsely claimed planned to invest in her company, prosecutors said.
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She made other false claims to business deals with Roc Nation and Apple, prosecutors said.
When the promised returns didn’t materialize for her friends and acquaintances, she “offered a series of excuses for the delays” and in early August 2022, “she attempted to embezzle … from an employer she had started working for as an executive assistant, which she was arranging to use to repay investors who were threatening to take legal action against her,” prosecutors said.
When that plan fizzled, she sent checks to three investors but they bounced, prosecutors said.
An FBI forensic accounting analyst concluded that “essentially all money defendant repaid to Esos investors came from Ponzi payments or loans,” prosecutors said.
Some of the investor money was also spent on her rent for a house in Pacific Palisades, which was $13,500 to $16,409 a month, prosecutors said.
Bisnoff also applied for a $150,000 COVID-19 relief loan in March 2020 with bogus information about her company, prosecutors said. She ended up only making a “handful of payments” on the loan, which was written off for $165,813.
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