Shaukat Shamim, a Santa Clara-based entrepreneur and founder of the technology start-up YouPlus, has been sentenced to 30 months in federal prison for securities fraud. The sentencing, delivered by U.S. District Judge James Donato on April 7, follows Shamim's guilty plea in September 2024 to charges stemming from a scheme to mislead investors about the capabilities and financial status of his firm.
YouPlus, established in 2013 in Silicon Valley, aimed to develop artificial intelligence tools for video content analysis. Shamim admitted fabricating details about the company's products and financial health to attract $17 million in investments. He misrepresented the existence of a potent AI search engine, claiming the use of neural networks for marketing predictions, which were in fact created through manual labor.
Shamim acknowledged maintaining this deception by falsifying company revenue documents. He presented altered bank statements and fictitious customer contracts to suggest significant client engagement and recurring revenues, though YouPlus had minimal actual earnings.
Between August 2018 and October 2019, Shamim collected approximately $6.4 million from investors by providing misleading financial documentation. A grand jury charged him in June 2022 with multiple counts of wire and securities fraud. He later admitted to one count of securities fraud, leading to the dismissal of other charges in exchange for his plea.
Judge Donato has also imposed a $50,000 fine and three years of supervised release following jail time. Shamim, currently out on bond, is set to begin his sentence on April 28, 2025, with a restitution hearing scheduled for June 23, 2025.
The FBI investigated the case, with Assistant U.S. Attorneys Lloyd Farnham and Noah Stern overseeing the prosecution, assisted by Madeline Wachs, Sara Slatterly, and Claudia Hyslop. The SEC's San Francisco office, pursuing its civil enforcement action, has also contributed to the efforts.