The Securities & Exchange Commission has filed a Complaint against Shaukat Shamim, the founder and CEO of YouPlus,purporting to have developed a machine-learning tool to analyze videos on the internet,of misrepresenting the company’s financial condition. According to the complaint, Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. When one investor pressed Shamim for information substantiating those claims, Shamim allegedly provided the investor with falsified bank statements in an effort to conceal the fraud. The scheme allegedly 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,” said Erin E. Schneider, Director of the SEC’s San Francisco Regional Office. “Private companies engaged in early-stage fundraising must tell the truth when selling securities to investors.”
Here, in part, is what YouPlus says it is doing on its LinkedIn page:
“WHAT IS YOUPLUS? Youplus is a cutting-edge technology innovation company that has built the world’s first Video Opinion Intelligence Engine (VOISE), an advanced AI and Machine Learning platform to unlock consumer opinions and experience insights from videos… With sophisticated Video AI Technology, Youplus has created the world’s largest catalog of real peoples’ opinions and experiences from the vast video web; enabling brands with better decisions and conversations. HOW DOES VOISE WORK? VOISE uses computer vision, voice modulation, and NLP to look-inside videos and separate salient sections. It then uses a cognitive AI engine to interpret and index rich, meaningful opinion people are sharing in videos about their experiences. YOUPLUS PRODUCT PORTFOLIO Youplus has built two products using VOISE: VISION: Video Customer Market Intelligence Platform Designed for brands to make better decisions, VISION democratizes access to insights and intelligence from billions of hours of video opinions, fundamentally disrupting Market Research via AI-powered automation. VIEW: Video Customer Experience Intelligence Platform Designed for businesses to have better conversations with customers, VIEW is democratizing data by enabling Consumer Video Experience Channels in the form of automated video Q&A or reviews on any web page.”
Investors listed on Pitchbook include:
Nimble Ventures; The CXO Fund; DN Capital; Elevate Innovation Partners and Freestyle Capital
The SEC’s complaint, filed in the U.S. District Court for the Northern District of California, charges YouPlus and 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. Attorney’s Office for the Northern District of California today announced criminal charges against Shamim.
The SEC’s investigation, which is continuing, is being conducted by Mike Foley and Rebecca Lubens, and supervised by Tracy L. Davis and Monique C. Winkler of the San Francisco Regional Office. The litigation against YouPlus and Shamim will be led by John Han and Brent Smyth. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Northern District of California and the Federal Bureau of Investigation.
Jeffrey Newman represents whistleblowers nationwide including SEC whistleblowers. He can be reached at Jeffrey.Newman1@gmail.com