Three men were arrested on June 5 for their roles in a scheme involving a company called Gigapix that allegedly defrauded hundreds of victims by promising large returns on movie investments and a production company’s imminent public offering.
Two defendants Gregory Pusateri, 49, of Woodland Hills, and David Pritchard, 66, of Malibu, were arrested last Thursday morning by federal authorities. Pritchard had recently been staying with a friend in Hollywood.
A third defendant in the case – Christopher Blauvelt, 58, of Woodland Hills, was arrested in Goleta, California, and a fourth defendant in the case, Cheri Brown, 65, of Studio City, agreed to surrender to authorities.
The four defendants were charged in a 36-count indictment returned under seal by a federal grand jury on May 15. The indictment accuses the defendants of mail fraud, wire fraud, attempted wire fraud and offering for sale unregistered securities.
The case centers on Gigapix, which was founded by Blauvelt in 2002 and took on Pritchard as a partner in 2006. The indictment alleges that between 2006 and 2012, Blauvelt and Pritchard hired telemarketers to solicit potential investors, who were told that Gigapix 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, according to the indictment.
The indictment alleges that 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. 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. The indictment alleges that the defendants made numerous misrepresentations to potential investors and withheld material facts. For example, the indictment alleges that 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.
The indictment further alleges that less than 5 percent of the investors’ money was used to finance the film, and that of the millions raised for the Gigapix investment, less than 20 percent of the 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.
Approximately 750 victims lost approximately $22.6 million – that they invested in Gigapix and “OZ3D”. If convicted, the defendants face decades in federal prison. The mail fraud and wire fraud counts, for example, carry statutory maximum penalties of 20 years in prison for each count.
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