Federal agents arrested the principals of a Los Angeles production company Thursday on charges that they defrauded investors in a 3-D film version of "The Wizard of Oz" and other projects of more than $22 million.
In an indictment unsealed in U.S. District Court on Thursday, prosecutors said Gigapix Studios Chief Executive Christopher Blauvelt and company President David Pritchard "spent investor money on salaries for themselves and to pay their personal expenses, employee salaries and commissions."
Gigapix, which had offices in Chatsworth and L.A., raised $8 million between 2008 and 2012 for the film, "OZ3D," but less than 5% was put toward making the movie, which was never completed, federal prosecutors said. The company collected an additional $14 million beginning in 2006 for what investors were told was a pre-initial public offering opportunity "like getting in on the ground floor of a company like Pixar," according to the indictment. Gigapix never had an IPO.
About 750 investors lost "virtually all the money they had invested," the indictment says.
Blauvelt, 58, of Woodland Hills, and Pritchard, 66, of Malibu and a company salesman, Gregory Pusateri, 49, of Woodland Hills, were arrested Thursday by FBI agents. A fourth defendant, Cheri Brown, 65, of Studio City, is to turn herself in at a later date. The 36-count indictment charged them with mail fraud, wire fraud and other charges. Pusateri and Pritchard pleaded not guilty Thursday afternoon. Blauvelt was to be arraigned Friday morning.
Pritchard's lawyer did not return calls seeking comment. Attorneys for Brown and Pusateri declined to comment. Blauvelt was in custody and could not be reached for comment. The fraud charges each carry maximum sentences of 20 years in prison.
The company used telemarketers to cold-call potential investors across the country and their pitches were filled with lies, "half-truths" and promises of high returns in as little as 18 months, according to the indictment. Investors were not told that the company had run afoul of several state regulatory agencies, including the California Department of Corporations.Copyright © 2014, Los Angeles Times