Authored by Naveen Athrappully via The Epoch Times,
Michelle Bisnoff, the CEO of wearable tech company Esos Rings Inc., was convicted of running a nearly $2 million Ponzi scheme.
Bisnoff tricked investors into believing she owned patents for "smart rings" payment technology that rightfully belonged to her former employer, according to a statement by the Department of Justice (DOJ) on Friday. Of the $2 million scammed from investors, the victims lost roughly $1.4 million.
Bisnoff, 59, from Boca Raton, Florida, was hired by United Kingdom-based company McLear Ltd. to develop a market in the United States for its near-field communication wearable payment rings, which embedded credit card information. McLear received a patent for this "smart ring" technology in 2016.
In addition, Bisnoff fraudulently obtained $150,000 in COVID-19 pandemic business relief loans. Instead of using funds for business expenses as initially claimed, Bisnoff used some of the money to pay for personal expenses.
In 2017, Bisnoff formed Esos, and as part of bringing investors into the company, she falsely represented that Esos owned patents for its smart rings, which were actually patents owned by McLear, according to an August 2024 complaint filed in the case.
According to the DOJ, Bisnoff deceived investors, saying that Esos was profitable, had made use of investor money for expanding manufacturing capabilities and inventory for meeting demand from major retailers like Target and Walmart, and received large infusions of capital from tech companies such as Apple and Roc Nation.
"She also falsely claimed to be on the cusp of a licensing arrangement with Middle Earth Enterprises (MEE), which controls The Lord of the Rings brand," the DOJ said.
However, Esos had no agreements with Target; sold only six smart rings on Walmart.com, out of which three were returned; generated little revenue; did not finalize any licensing agreement with MEE; and did not secure investment from Roc Nation or Apple, the department said.
Bisnoff was found by the jury on Thursday to be guilty on various counts of wire fraud, securities fraud, money laundering, and identity theft. Her sentencing hearing is scheduled for January.
According to the Securities and Exchange Commission (SEC), there are several red flags that help identify a Ponzi scheme. One is the promise of high returns with little to no risk. People should be suspicious of any investment opportunity claiming to generate guaranteed returns.
On Sept. 15, the House passed the Tax Relief for Fraud Victims Act. Under current law, the federal government can tax victims of financial fraud on the money that is stolen from them, according to a Sept. 16 post on X by Rep. Max Miller (R-Ohio). This bill seeks to rectify this issue, said Miller, who introduced the bill.
Specifically, the bill allows taxpayers to elect to claim a tax deduction for losses that occur due to fraud, deceit, and misrepresentation.
"Victims of financial fraud should not face an additional tax burden after already suffering significant financial losses," Dale Brown, the CEO of the Financial Services Institute, said in a statement on Sept. 16, urging the Senate to take up the bill.