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The Securities and Exchange Commission (SEC) has charged Shaukat Shamin, founder and CEO of YouPlus, with defrauding his investors by misrepresenting the company's financial condition. 

Shamin, founder of the Mountain View-based startup is accused by the SEC of raising millions of dollars in funding by committing fraud. He also made false statement regarding the number of customers YouPlus already had and that they had a commitment from a prominent venture capital firm for their Series A round of financing. 

SEC and criminal charges being filed

“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.”

The SEC’s complaint was filed in the U.S. District Court for the Northern District of California. YouPlus and Shamim are charged with violations of anti-fraud provisions of the federal securities laws. The SEC seeks permanent injunctions, civil money penalties, disgorgement with prejudgment interest, and an officer-and-director bar against Shamim.

In the meantime, the U.S. Attorney’s Office for the Northern District of California announced criminal charges were being filed.

Shaukat Shamim, 49, of Santa Clara was ordered to appear in a San Francisco Federal court to answer charges that he made false statements about the technology and revenue of Youplus Inc. while pursuing investors. Shamim is also accused of using investor funds for luxury personal expenses.

Shamim used false bank statements 

In 2019, Shamim was claiming that more than 800 iconic brands and agencies in the U.S., UK, and India were already working with the startup.

According to the SEC complaint, Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. He also used falsified bank statements to prove the claim.

In late 2019, Shamim confessed to some of his investors that YouPlus had in fact earned less than $500,000 and had only four paying customers from the time YouPlus opened its doors in 2013.

Last August, the SEC asserts that Shamim provided investors with a fake bank statement showing that Youplus had over $600,000 in revenue from 35 clients, including Coca-Cola, Kraft, and Netflix. The reality was that the real bank statement revealed only one client and $65,000 in revenue. 

YouPlus technology under scrutiny

According to Crunchbase, the Mountain View-based technology start-up was founded in 2014 and has 101-250 employees. They had been raising funds since 2013