SANTA ANA, CA—An Irvine man pleaded not guilty this afternoon after
surrendering this morning to special agents with the FBI in an investment scheme case
that allegedly involved losses totaling $2.4 million.
Charles “Chuck” Davis, 53, was taken into custody without incident this morning
and was arraigned this afternoon in United States District Court. After pleading not
guilty, Davis was released on a $160,000 bond and was ordered to stand trial on
February 22.
Davis was named in a 10-count indictment returned last Wednesday by a federal
grand jury. The indictment alleges that Davis operated an investment scam involving
the Newport Beach-based LifeRight Holdings, Inc. According to promises made by
Davis, LifeRight was going to develop and use infomercials to market a product to
combat child obesity.
Davis signed agreements with investors—Private Placement Memoranda (PPM)—that provided for 15 percent interest on the investment over a 13-month period. The
PPMs also called for investors to receive royalties on products sold and an option to
convert the investment into shares of LifeRight stock when the company began selling
product.
The indictment alleges that investor funds were not used in the manner set forth
in the PPMs. Instead, Davis used investor funds for personal expenses, including
payments to himself, family members, and girlfriends; clothing, jewelry, and other
consumer items; rent, utilities and credit card payments; and legal fees to lawyers
representing Davis in lawsuits brought against him.
As a result of the scheme, the indictment alleges that Davis caused
approximately 40 investors to lose more than $2.4 million.
In addition to LifeRight Holdings, Davis owned, controlled or was affiliated with
LifeRight Holdings International, Inc.; LifeRight Worldwide, Inc.; American Membership
Systems, Inc.; Solomon Davis Financial Group, Inc.; Forward Area, Inc.; Arcane
Communications, Inc.; CJ Davis, Inc.; Arcane Communications; and Hawk
Management Group.
The indictment accuses Davis of two counts of mail fraud, five counts of wire
fraud and three counts of money laundering. If he is convicted of all 10 counts in the
indictment, Davis would face a statutory maximum sentence of 170 years in federal
prison.
An indictment contains allegations that a defendant has committed a crime.
Every defendant is presumed to be innocent until proven guilty in court.
The case against Davis was investigated by the Federal Bureau of Investigation.
Orange County Man Surrenders After Being Indicted in Investment Fraud Case that Caused $2.4 Million in Losses
Amplify’d from losangeles.fbi.gov
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