United States Federal Courthouse Los Angeles. Photo by John Schreiber.
United States Federal Courthouse Los Angeles. Photo by John Schreiber.

Two Los Angeles men were sentenced to federal prison Monday for orchestrating a $21 millions scheme that defrauded hundreds of victims by promising large returns on investments in a movie production company and in a proposed 3-D animated movie based on the Wizard of Oz.

Christopher Blauvelt, 59, a former Woodland Hills resident who was transient when he was arrested last year, and David Pritchard, 67, of Hollywood, were convicted at trial last year on a series of federal charges, including mail fraud, wire fraud and offering for sale unregistered securities.

U.S. District Judge Manuel Real sentenced Blauvelt to eight years in prison, and Pritchard to five years. A restitution hearing is scheduled for April 20.

The case centers on a company called Gigapix founded by Blauvelt in 2002. Pritchard became a partner in the business in 2006.

During seven years, Blauvelt, who was the chief executive officer of Gigapix, and Pritchard, the president of the company, hired telemarketers to solicit potential investors.

Potential investors 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.

As part of the scheme, 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 to them. At that time, the potential investors were turned over to “closers,” who collected their money.

Two Gigapix telemarketers who acted as closers — Gregory Pusateri, 50, of Woodland Hills, and Cheri Brown, 65, of Studio City — were also convicted at trial, and are scheduled to be sentenced on Feb. 23.

In addition to raising money for Gigapix, the defendants also raised funds to produce a movie titled “OZ3D.”

While soliciting money for Gigapix and “OZ3D,” the defendants made numerous misrepresentations to potential investors and withheld material facts, authorities said.

Investors were told that Gigapix was a financially successful company, generated high returns on investments in less than 18 months, and investments carried little or no risk, according to authorities.

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.

About 730 victims lost virtually all of the money — roughly $21 million — that they invested in Gigapix and “OZ3D.”

“This case involves an egregious fraud of massive proportions that targeted non-wealthy victims who the defendants heartlessly misled,” prosecutors wrote in sentencing documents.

“The effects of this crime on the victims are truly devastating in every way,” and compounded issues affecting elderly victims, low-income victims, victims who suffered from illnesses such as cancer and the effects of polio, and victims who were supporting children with Down syndrome and spina bifida, prosecutors wrote.

City News Service

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