Man Killed in Kidnapping Was Suspect in Telemarketing Fraud

Christopher Rawlings, the Woodland Hills entrepreneur who was killed last week during a botched kidnapping, was running several businesses suspected of bilking more than $19 million from people, many of whom thought they were investing in records and movies, a federal prosecutor said Tuesday.

Rawlings, 30, was under investigation by FBI agents for money laundering, mail fraud and securities fraud at the time of his death, and detectives are investigating whether his business practices were related to his slaying, authorities have said.

According to federal court documents made public Tuesday, Rawlings and two other men operated UST&T;, Skyline Entertainment, International Cosmetics and WRI Holdings Inc., all telemarketing firms based in or around the San Fernando Valley.

WRI Holdings promoted investment in unreleased recordings by the Beatles and Marvin Gaye; UST&T; promoted investments in a public utilities company; International Cosmetics in cosmetics; and Skyline Entertainment in motion picture production, according to a court affidavit.

The companies, the affidavit said, sold unregistered stock and took commissions of up to 80% without disclosing to investors that they were doing so.

Authorities last weekend arrested John Charles Watson, whom Assistant U.S. Atty. Brent Whittlesey described as a manager of WRI Holdings, though he is listed in corporate documents as the company’s president.

Watson, whom authorities described as an associate of Rawlings, is charged with money laundering, mail fraud and securities fraud.

In a brief appearance in court Tuesday, Watson told U.S. Magistrate Rosalyn M. Chapman that his funds were limited to “a couple hundred dollars” in a savings account and that he could not afford an attorney.

Outside the courtroom, Whittlesey described Watson as “an economic danger to the community” and said he had requested that the defendant be held without bond. Chapman is expected to rule on that request Thursday.

According to court documents, Scott Courtney and Peter Aro were the other principals in the companies. Whittlesey said that Courtney is awaiting trial in an earlier fraud case and that an arrest warrant has been issued for Aro, who is at large.

Meanwhile, LAPD investigators would not comment on whether they suspect any link between Rawlings’ killing and the federal probe.

“They’re working their case. We’re working ours. We’re comparing notes from time to time,” said Sgt. Rick Swanston of the LAPD’s West Valley homicide unit. Whittlesey declined to comment.

Rawlings was beaten in his garage by two men who stuffed him in the trunk of his Bentley and fled just as police--summoned by Rawlings’ wife--drove up. In the chase that followed, the Bentley crashed into another car and hit a utility pole, ejecting Rawlings, who died of his injuries. The kidnappers escaped.

FBI agents armed with a search warrant raided WRI Holdings’ corporate office at 20501 Ventura Blvd. in December. Agents seized telephone sales scripts or “pitches,” blank certificates for preferred stock and blank subscription agreements for investors.

According to documents subpoenaed by FBI agents, WRI Holdings entered into an agreement with Gary Walters to raise $1 million for his record company, Walters Records Inc. According to the affidavit, WRI Holdings made an offering of $5 million worth of unregistered stock in the company.

But according to the affidavit, only about $1 million of the money that was raised would be contributed to making records, with the remaining 80% going toward sales commissions to WRI Holdings. The affidavit said investors were misled by written scripts that projected a return of 450%.

Seized documents show that 90 investors contributed more than $1 million between June and December of last year, according to the affidavit.

Watson is accused of helping Rawlings, Courtney and Aro launder the profits, according to the FBI affidavit based on interviews with former employees of the companies and victims of the alleged scams.

Watson, who was in charge of day-to-day operations at WRI Holdings, would issue company checks to various individuals and have those individuals cash the checks and turn the proceeds over to him, the affidavit says. He then would turn over the cash--allegedly hundreds of thousands of dollars--to Rawlings, Courtney and Aro, leaving no trace of the payments, the affidavit alleges.

Watson was paid a commission of 7% to 10% of the cash, prosecutors contend.

Utah securities officials in April ordered Rawlings, his brother Douglas and other sales representatives from Skyline Entertainment to stop calling consumers in that state. According to the order, which followed an undercover investigation, Rawlings identified himself as a “co-executive producer” for the firm and said Skyline had lined up Keanu Reeves to star in a film titled “Great Jones Street.” Utah authorities said there was no such agreement.

Times staff writer Jeff Leeds contributed to this report.