LOS ANGELES—Two men who were leaders of a scheme involving a company called Gigapix that defrauded hundreds of victims by promising large returns on movie investments and a production company’s imminent public offering were sentenced today, receiving sentences of up to eight years in federal prison, officials said.
The two defendants sentenced Monday morning—Christopher Blauvelt, 59, a former Woodland Hills resident who was transient when he was arrested last year, and David Pritchard, 67, of Hollywood (formerly of Malibu)—were convicted at trial last year on a series of federal charges, including mail fraud, wire fraud and offering for sale unregistered securities.
U.S. District Judge Manuel Real sentenced Blauvelt to eight years in prison, and Pritchard was sentenced to five years.
Four people were charged for being involved in a $22 million investment scheme that promised victims large returns on movie projects, officials said Thursday.
Two other defendants – Gregory Pusateri, 49, of Woodland Hills, and Cheri Brown, 65, of Studio City, who acted as closers in the scheme, were convicted at a trial and are scheduled to be sentenced on Feb. 23.
About 750 victims lost virtually all of the money – approximately $22.6 million – that they invested in Gigapix and “OZ3D,” according to the indictment.
According to the indictment, this is what happened:
- The case centers on a company called Gigapix that was founded by Blauvelt in 2002 and took on Pritchard as a partner in 2006, officials said.
- Between 2006 and 2012, Blauvelt and Pritchard hired telemarketers to solicit potential investors, who were told that Gigpix was an animation company similar to Pixar Animation Studios, and that Gigapix was developing projects expected to generate large profits when the company went public.
- Brown and Pusateri were among the top salespeople for Gigapix.
- Telemarketers – known as “fronters” – used lead lists purchased by the defendants to find potential investors and then used scripts touting the supposed merits of Gigapix.
- When investors expressed an interest, materials about the investment were mailed to them. At that time, the potential investor was turned over to Brown and Pusateri – who were known as “closers” – to collect their money.
- In or around 2008, the defendants allegedly shifted their focus to raise funds to produce a movie titled “OZ3D,” while continuing to solicit funds for Gigapix. In soliciting money for Gigapix and “OZ3D,” the indictment alleges that the defendants made numerous misrepresentations to potential investors and withheld material facts.
- For example, investors were told that Gigapix was a financially successful company, that they would receive high returns on their investments in less than 18 months, and that the investments carried little or no risk.
- Investors were also told there was an urgency to invest in Gigapix and “OZ3D” because the window of opportunity to invest and the number of shares available were limited.
- Investors were told that a minimum of 65 percent of the money invested in “OZ3D” would be used to produce and distribute the movie, and that only a small percentage of investor money would be used to pay commissions and finder’s fees.
- However, less than 5 percent of the investors’ money was used to finance the film.
- Less than 20 percent of those funds were spent on the production of movies or television shows. The majority of the money raised from investors was spent on salaries, commissions and overhead, according to the indictment.