Santa Ana Smart-Ring Fraud Verdict: Why Startups Must Be Able to Prove They Own Their Intellectual Property

Michelle Bisnoff was the CEO of Esos Rings Inc. According to the U.S. Attorney’s Office for the Central District of California, Bisnoff previously had been hired by U.K.-based McLear Ltd. to develop the U.S. market for McLear’s patented near-field-communication payment rings.¹

DOJ states that, by no later than early 2017, Bisnoff falsely claimed ownership of a key patent, including through the use of a falsified patent assignment, and formed Esos Rings to market smart rings based on that patent.¹

According to the evidence summarized by DOJ, investors were also told that Esos was profitable, needed capital to meet retailer demand, and was receiving or expecting investment or licensing relationships with well-known companies. DOJ reported that those relationships did not exist as represented. The companies are mentioned only because of what investors were told about them; DOJ does not describe any of them as participants in the scheme.¹

The jury convicted Bisnoff on September 24, 2026, and DOJ announced the verdict the next day. According to DOJ, the convictions include six counts of securities fraud, six counts of wire fraud, two counts of money laundering, one count of wire fraud in connection with a COVID-relief loan, and one count of aggravated identity theft.¹

DOJ reported that Bisnoff fraudulently obtained nearly $2 million from investors and caused victims to lose approximately $1.4 million. Sentencing is currently scheduled for January 21, 2027.¹

In September 2023, the SEC filed a civil enforcement action against Esos and Bisnoff. According to the SEC’s complaint, they raised $1.95 million from investors between February 2017 and June 2022 through false and misleading statements, including that Esos owned the patents for the smart rings. Those were SEC allegations; Esos and Bisnoff consented to final judgments without admitting or denying them.²

According to DOJ, the September 2023 judgment held Bisnoff and Esos liable for disgorgement, prejudgment interest, and a civil penalty totaling $836,548, and DOJ reported that none of that amount had been paid.⁵¹

A founder may have developed a product, helped commercialize technology, written software, designed a brand, or worked extensively with an invention without personally owning every intellectual-property right associated with it.

Ownership can depend on:

For patents, 35 U.S.C. § 261 provides that patents have the attributes of personal property and that patents and patent applications are assignable in law by an instrument in writing.³

USPTO assignment records can be an important diligence tool. But the USPTO explains that recording an assignment is a ministerial act—it is not an agency determination that the document is valid or that the recorded party necessarily prevails in an ownership dispute. A search of USPTO records is a starting point, not the last word.⁴

Depending on the transaction and the type of IP, founders, investors, or buyers may want to examine:

The purpose is not merely to confirm that an IP asset exists. It is to determine what rights the company actually possesses and whether another person or business may have a competing claim.

Unclear IP ownership can create problems during:

For founders, ownership cleanup is usually easier before substantial money is raised or a transaction is underway. Many gaps—a missing contractor assignment, a founder who never signed over a pre-formation invention—can often be addressed with properly drafted startup and transaction documents if they are caught early.

Investors and purchasers, meanwhile, should not assume that an asset belongs to a company simply because it appears in a pitch deck or is central to the company’s product. When ownership or contractual representations are later disputed, the issue can become a business and commercial litigation matter.

The Bisnoff verdict does not mean that:

The criminal prosecution involved allegations and trial evidence concerning a broader course of intentional misrepresentations. Fraud depends on facts and legal elements that go well beyond an ordinary contractual or ownership disagreement.

For founders, the preventive lesson is straightforward: identify the company’s important intellectual property early, determine who presently owns it, and document any necessary assignments or licenses before fundraising or a major transaction.

For investors and buyers, diligence should test the ownership story rather than simply repeat it. When a startup’s valuation depends heavily on a patent, software platform, trademark, dataset, or other proprietary asset, the ownership chain can be as important as the asset itself.