An Irvine man persuaded 40 people to invest a total of $2.4 million in his Newport Beach-based business that claimed to sell a product combating childhood obesity, but instead of making money for them he spent all of their money on himself, according to federal prosecutors.
In an indictment unsealed last week by a federal grand jury, Charles "Chuck" Davis, 53, was charged with 10 felony counts of defrauding investors. He pleaded not guilty in court Monday and was released on a $160,000 bond.
Between January 2007 and November 2008, Davis operated LifeRight Holdings Inc. of Newport Beach, a company he told customers would air TV infomercials of a product that fights child obesity, according to the indictment.
Instead, prosecutors allege, Davis just gathered together investors and spent the money on himself.
Davis is accused of using the investments — in sums ranging from $25,000 to $50,000 and possibly larger — and paying himself, his family and his girlfriend. He bought clothes and jewels, paid for his rent and utilities, and even paid lawyers' fees for unrelated lawsuits using LifeRight investors' money, authorities claim.
He promised his victims a 15% return after 13 months, told them that the company already had a significant number of investors and said he wouldn't take a paycheck until the product started selling, according to the indictment.
A tentative trial date is scheduled for Feb. 22.