LOS ANGELES, CA – A former wearable technology executive was convicted by a federal jury in Santa Ana after prosecutors said she used falsely claimed ownership of smart ring patents, fabricated business relationships and misleading financial documents to obtain nearly $2 million from investors.
Michelle Bisnoff, 59, also known as Michelle Angeline Silverstein and Shelly Silverstein, was found guilty of six counts of securities fraud, six counts of wire fraud, two counts of money laundering, one count of wire fraud involving a COVID-19 relief loan and one count of aggravated identity theft, according to the U.S. Department of Justice.
The verdict came after a seven-day federal trial in which prosecutors presented evidence about Bisnoff’s company, Esos Rings Inc., and its efforts to attract investors through claims about patented payment technology and potential business relationships with major companies.
The Justice Department said Bisnoff ultimately obtained nearly $2 million from investors, causing approximately $1.4 million in losses.
Smart ring patents became central to the case
Before founding Esos Rings, Bisnoff had been hired by McLear Ltd., a United Kingdom-based technology company, to develop the U.S. market for its patented near-field communication, or NFC, payment rings.
The wearable devices were designed to incorporate payment information into a ring, allowing users to make contactless transactions.
According to evidence presented at trial, Bisnoff later claimed that she personally owned the key patent associated with the technology.
Prosecutors said she used a falsified patent assignment to support that claim and then established Esos Rings to market smart rings based on the technology.
The Justice Department said Bisnoff knew that Esos did not actually own the patents she represented as belonging to the company.
The issue of patent ownership was important because Bisnoff allegedly used the supposed intellectual property as part of her pitch to potential investors, portraying Esos as a technology company with valuable proprietary assets and significant commercial potential.
Investors were told Esos had major business opportunities
According to federal prosecutors, Bisnoff made a series of claims intended to make Esos appear substantially more successful than it actually was.
She allegedly told investors that the company was profitable and expanding its manufacturing capabilities and inventory to meet expected demand from major retailers, including Target and Walmart.
She also claimed that Esos was receiving substantial investments from Apple and Roc Nation, and that the company was close to a licensing agreement with Middle Earth Enterprises, the company that controls the Lord of the Rings brand.
Those claims were not supported by the company’s actual business activity, prosecutors said.
The Justice Department said Esos had little business revenue, had no agreement with Target, and sold only six rings through Walmart.com. Three of those six sales were later returned.
The company also never received the investments from Apple or Roc Nation that Bisnoff had represented to prospective investors, according to trial evidence.
No licensing agreement with Middle Earth Enterprises was finalized either.
The allegations about the company’s supposed relationships with major brands were therefore not simply projections about future business, according to prosecutors. The government presented them as false representations made to attract investment.
Financial records were also fabricated
Prosecutors said Bisnoff reinforced her claims about Esos by providing investors with financial and corporate documents that appeared to demonstrate the company’s value and performance.
Those materials included financial statements, a corporate tax return and a valuation of the company’s patents.
According to the Justice Department, however, the professionals identified as having prepared or signed those documents had not actually prepared or verified them.
The fabricated records were used alongside the claims about Esos’ patents, retail relationships and prospective investors, giving potential investors what prosecutors described as a misleading picture of the company’s financial condition.
The U.S. Securities and Exchange Commission had previously brought a civil case against Bisnoff and Esos over the investment scheme.
In its 2023 case, the SEC said Esos and Bisnoff had fraudulently raised approximately $1.95 million from investors through false and misleading statements about the company’s business and its smart-ring technology.
Investor money allegedly paid personal expenses
The federal criminal case also centered on how money raised from investors was used.
According to trial evidence, Bisnoff used much of the money for personal expenses and to make payments to earlier investors, a structure prosecutors described as a Ponzi-type scheme.
When promised returns did not materialize, investors were given explanations for the delays.
One investor who testified at trial characterized those explanations as “dog-ate-my-homework” excuses, according to the Justice Department.
Prosecutors also said Bisnoff attempted to obtain approximately $550,000 from a separate employer to provide money for investor payments.
That effort did not succeed. She later issued checks to investors that bounced, according to the evidence presented at trial.
By the end of the scheme, federal prosecutors said Bisnoff had fraudulently obtained nearly $2 million and caused investors to lose about $1.4 million.
COVID relief loan added another fraud count
The investment scheme was not the only fraud for which Bisnoff was convicted.
In March 2020, during the early months of the COVID-19 pandemic, Bisnoff used the name Michelle Silverstein when applying for an Economic Injury Disaster Loan through a federal pandemic-relief program.
The Small Business Administration administered the Economic Injury Disaster Loan program, which was designed to provide financial assistance to businesses experiencing economic harm because of the pandemic.
According to the Justice Department, Bisnoff falsely reported Esos’ gross revenue and cost of goods sold for the period used to determine eligibility.
She also certified that the loan proceeds would be used for business expenses.
Instead, prosecutors said she used part of the $150,000 loan for personal expenses, including approximately $15,600 in monthly rent for a residence in Pacific Palisades.
The COVID-related conduct resulted in a separate wire-fraud conviction.
The case was investigated by the FBI and the SBA Office of Inspector General, with substantial assistance from the SEC and the U.S. Attorney’s Office for the Southern District of Florida.
Earlier SEC judgment remains unpaid
The criminal conviction follows a separate civil enforcement action involving Bisnoff and Esos.
In September 2023, a federal court entered a judgment requiring Bisnoff and Esos to pay the SEC amounts connected to the civil fraud case.
The Justice Department said the judgment totaled $836,548, including disgorgement, prejudgment interest and a civil penalty.
According to the Justice Department’s latest announcement, court records show that neither Bisnoff nor Esos had paid any of those amounts as of the criminal case’s conclusion.
The SEC’s earlier enforcement action alleged that Esos and Bisnoff raised approximately $1.95 million from investors while making false statements about the company’s operations, patent ownership and potential acquisition by Apple.
The civil and criminal proceedings are separate, with the criminal case resulting in the federal jury’s guilty verdict.
Sentencing scheduled for January 2027
Bisnoff’s sentencing hearing is scheduled for January 21, 2027, before U.S. District Judge Mónica Ramírez Almadani.
The statutory maximum penalties are substantial.
According to the Justice Department, each securities-fraud and wire-fraud count carries a maximum sentence of 20 years in federal prison. Each money-laundering count carries a maximum of 10 years, while the aggravated identity-theft conviction carries a mandatory two-year consecutive sentence.
Those are statutory maximums rather than an indication of the sentence Bisnoff will ultimately receive. The actual sentence will be determined by the federal court after consideration of the applicable sentencing rules and the circumstances of the case.
The court will also address financial penalties and restitution as part of the proceedings.
For now, the conviction closes the trial phase of the federal criminal case but leaves sentencing and the question of financial recovery for victims still unresolved.
