By Kay B. Day
In a bizarre turn, a high profile player in pop culture entertainment has been sentenced to five years in a federal prison. The FBI said David Pritchard, 67, and his business partner, Christopher Blauvelt, 59, were convicted in 2014 on a series of federal charges including mail fraud, wire fraud, and offering unregistered securities for sale.
Pritchard got five years; Blauvelt got eight years. They were sentenced in federal court (Central District) in Los Angeles on Feb. 9.
Pritchard seems an unlikely fraudster.
Bloomberg Business said Pritchard raised more than “$200 million dollars for various entertainment companies over the last five years.” Pritchard had a long line of successes, including serving as vice president of HBO, as CEO of Film Roman, and as executive producer of episodes for series like The Simpsons and Garfield.
The fraud charges arose from Pritchard’s association with Blauvelt. Blauvelt founded Gigapix in 2002; Pritchard came aboard in 2006. The FBI summary detailed how the partners’ scheme cost investors approximately $21 million:
“The two hired telemarketers to solicit potential investors, who were told that Gigapix was a blockbuster animation company waiting to happen—similar to Pixar Animation Studios—and that Gigapix was developing projects expected to generate huge profits when the company went public.
The telemarketers—known as ‘fronters’—used marketing lists to cold call potential investors and worked from scripts touting the supposed merits of Gigapix. When victims expressed an interest in investing, they were turned over to “closers” who collected their money. Two of the company’s closers were also convicted in the fraud.
While soliciting money for Gigapix and OZ3D, the defendants told lies and half-truths, suggesting that the company was financially successful and investors would receive high returns on their investments in less than 18 months. They claimed that investments carried little or no risk.”
Gigapix pitched profits to come from a project in the works to create an animated version of The Wizard of Oz titled OZ3D. Some of the money raised went into attempting to make the film, but the FBI alleged most went into “big salaries, commissions, overhead for a fancy office, and other expenses.”
Some victims were veteran investors able to bear the loss. But others who invested were elderly retirees, teachers, and secretaries.
While it’s hard for some to understand how an individual might part with his money in response to a telephone solicitation, fudging facts was part of the pitch:
“While soliciting money for Gigapix and OZ3D, the defendants told lies and half-truths, suggesting that the company was financially successful and investors would receive high returns on their investments in less than 18 months. They claimed that investments carried little or no risk.”
FBI announcements about the case included an acknowledgment of other scams involving telemarketers who “lure victims into investing in films that never get made.”
Blauvelt is also a well-known name in the entertainment business, but no personal information was given about the Christopher Blauvelt involved with Gigapix other than his age.
Little mention was made of Gigapix Studios’ Workaholics series on Comedy Central produced with Avalon Television, Inc. Comedy Central Communications included in a release about the series, “Gigapix’s first feature film, ‘Captain Abu Raed,’ won the Sundance Audience Award in 2008.”
The FBI said the judge in the federal case has scheduled a restitution hearing on April 20.
Commenters weighed in at an article posted on Deadline, providing information other media did not include in stories about the scam. Because the comments are mostly posted under screen names, it is impossible to verify the claims, but they are interesting nonetheless.
One reader at Deadline asked a question most investors would probably like answered: “Is their a possibility of investers getting any of their money back?” [sic]
(March 18, 2015)
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