SANTA ANA, CALIF.
An Irvine man raised well over $3 million from victims who thought they were investing in products that would treat childhood obesity and Type II diabetes.
Thursday, U.S. District Judge Andrew Guilford sentenced to Charles M. “Chuck” Davis, 57, to 12 years and seven months in prison.
The judge ordered Davis to pay $3.4 million as restitution to 66 victims, officials said.
After a seven-day trial last June, a federal jury found Davis guilty of two counts of mail fraud, seven counts of wire fraud and four counts of money laundering.
According to court evidence, Davis ran an investment scam involving the Newport Beach-based LifeRight Holdings, Inc.
Officials said Davis promised that LifeRight was going to develop and use infomercials to market a product to combat child obesity. Davis promised investors a 15 percent return in only 13 months, as well as royalties on products sold and an option to convert the investment into shares of LifeRight stock when the company began selling product, authorities stated.
Davis took in about $2.5 million from 45 investors, who lost all of their money.
The second scheme involved a company called DT2, which purportedly offered a product to treat Type II diabetes.
From 2009 until Davis was jailed in 2011, Davis raised approximately $900,000 from about 21 DT2 investors.
Similar to the LifeRight scam, Davis diverted the investor funds to other companies and, instead of spending the money on DT2 business, Davis used the money to pay for high-end restaurants, expenses sustained by several girlfriends, spa treatments, cash withdrawals, and his civil and criminal defense attorneys.
The victims in the DT2 also lost all of their money.
In both schemes, Davis never had a real product.
Davis has been in custody since September 2011, when his bond in this case was revoked after a judge found he was improperly soliciting money in the DT2 scheme, according to officials.