Defendants in $21 Million Movie Fraud Case Sentenced to Federal Prison

Gigapix leaders were convicted of using a telemarketing operation to defraud 730 low-income and middle-class victims of about $21 million.

A Los Angeles federal judge on Monday sentenced Gigapix CEO Christopher Blauvelt and company president David Pritchard to eight and five years, respectively, in federal prison, the U.S. Attorney’s office announced, months after they were convicted of leading a fake movie investment scheme that defrauded approximately 730 victims of about $21 million.

The scheme, which centered in part on a purported animated Wizard of Oz film, OZ3D, announced three years ago, led to the two men’s conviction on a series of federal charges, including mail fraud, wire fraud and offering unregistered securities for sale. The judge, Manuel Real, scheduled a restitution hearing for April 20, and sentencing for convicted Gigapix telemarketers Gregory Pusateri and Cheri Brown for February 23.

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“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.

According to federal authorities, “those who were solicited to invest 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.”

In addition to raising money for Gigapix, the defendants also raised production financing for OZ3D and made numerous misrepresentations, authorities said: investors were told that Gigapix was a financially successful company, they would receive high returns on their investments in less than 18 months, the investments carried little or no risk, and investors would see returns within a year or 18 months of investing, as well as that 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.

According to information provided to The Hollywood Reporter in 2011, the movie was to be produced by Toronto-based indie Multiple Media Entertainment and animated by Starz Animation Toronto, later renamed Arc Productions.

According to authorities, investors were told that at least 65 percent of the money invested in OZ3D would be used to produce and distribute the movie, and that only a small percentage of investor money would be used to pay commissions and finder’s fees, but in reality less than 5 percent of the investors’ money was used to finance the film and less than 20 percent of funds raised for Gigapix were spent on motion picture or television production, with the majority of the money spent on salaries, commissions and overhead.

The victims lost virtually all of the money invested, said federal authorities.

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