Judge Imposes Prison Terms in Rocshire Case

A federal judge in Los Angeles has sentenced the owners of an Anaheim-based record company to 10 years in prison for embezzling more than $12 million from a Hughes Aircraft Co. employee medical benefit plan.

U.S. District Judge Manuel Real on Monday imposed the sentences on Shirley Davis and her husband, Clyde L. (Rocky) Davis, owners of now-defunct Rocshire Records, who had pleaded guilty last October to charges arising from the 1980-84 embezzlement scheme. In addition, Real fined Shirley Davis $100,000 and her husband $60,000.

Assistant U.S. Atty. Fred Heather, who was in charge of the prosecution, called the sentence “fair and appropriate.”

The scheme first came to light last August when Hughes Aircraft filed a civil suit in Orange County Superior Court claiming that Shirley Davis, a nine-year employee working as a group insurance analyst in the company’s medical claims department, had transferred millions of dollars to Rocshire Records by writing checks made payable to Dr. C.L. Davis Jr.

1,600 Checks Issued

A subsequent FBI investigation determined that she had issued more that 1,600 checks--mostly in the $8,000 to $9,000 range--that were endorsed by her husband and deposited in a Rocshire account at a Bank of America branch. According to investigators in the case, Rocshire was almost totally funded by money from Hughes.

Davis, a 39-year-old mother of three, has no previous criminal record. Rocky Davis has a criminal record for burglary, robbery and grand theft and has served time in state prisons in Florida, Rhode Island and California, most recently a 2 1/2-year sentence ending in 1977 for the burglary of a Tustin medical office complex and a Garden Grove pharmacy.

According to court documents, more than $8 million of the more than $12 million embezzled by the Davises was reimbursed to Hughes by the federal government under terms of the company’s contracts with the Defense Department. The contract require the government to pay Hughes for certain medical insurance premium costs of Hughes employees working on government contracts.