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Father and Daughter Charged with Securities Fraud, Obstruction of Justice
Danville Residents Conspired to Defraud Investors in $2.8 Million Scheme
SAN FRANCISCO—A federal grand jury in San Francisco returned a 12 count superseding indictment against two Bay Area defendants charging securities fraud, false statements to accountants, falsifying books and records, obstruction of justice, and conspiracy relating to a fraudulent investment scheme in which the defendants made profits in excess of $2.8 million, United States Attorney Joseph P. Russoniello announced.
The superseding indictment, which was unsealed today, names: Sholeh A. Hamedani, 42, of Danville, Calif., and her father, Nasser V. Hamedani, 71, also of Danville.
According to the superseding indictment, Sholeh A. Hamedani and Nasser V. Hamedani raised millions of dollars from investors in a start-up company they had founded and operated—The Children's Internet, Inc.—purportedly to develop and market software to protect children's access to the Internet. Contrary to their representations, the defendants diverted approximately $1.2 million of investor funds to pay personal expenses that included gambling, automobiles and home mortgages. The superseding indictment also alleges that the defendants used hidden accounts to trade shares in The Children's Internet and generate additional profits for themselves of approximately $1.6 million.
The defendants were arrested this morning by special agents from the Federal Bureau of Investigation and made their initial appearance in federal court in San Francisco before Magistrate Judge Edward M. Chen. They were each released on a $500,000 bond and ordered to submit to electronic monitoring and home detention pending further proceedings. The defendants' next scheduled appearance in district court is at 9:30 a.m. on July 30, before Magistrate Judge Chen, for identification of counsel and review of the terms and conditions of their release.
The maximum statutory penalty for securities fraud in violation of 18 U.S.C. § 1348 is 25 years imprisonment and a fine of $250,000 or twice the amount of gain or loss, whichever is greater. The maximum statutory penalty for securities fraud in violation of 15 U.S.C. § 78ff is 20 years imprisonment and a fine of $5 million or twice the amount of gain or loss, whichever is greater. The maximum statutory penalty for conspiracy and obstruction of justice is five years imprisonment and a fine of $250,000 or twice the amount of gain or loss, whichever is greater. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Timothy J. Lucey is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Jennifer Hiwa. The prosecution is the result of a two year investigation by the Federal Bureau of Investigation. The United States Attorney's Office wishes to recognize the assistance of the Division of Enforcement of the Security and Exchange Commission's San Francisco Regional Office.
Please note, an indictment contains only allegations against an individual and, as with all defendants, Ms. Hamedani and Mr. Hamedani must each be presumed innocent unless and until proven guilty.
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