14 DAY TRIAL // Two individuals running Los Angeles-based Gigapix Studios received prison sentences last month for tricking people into investing in the company and an alleged production of an animated Wizard of Oz movie called OZ3D, raising about $21 / €19.7 million from the gullible.
The fraudsters employed telemarketers to cold-call potential investors advertising supposed achievements of Gigapix Studios and convincing them to put their money on the line with the promise of huge returns when the company went public.
Fairy-tale promises got victims to invest
Over a period of seven years that started in 2006, about 730 people were duped this way, some of them losing their life savings in this Hollywood movie financial scheme, the FBI says.
Investments in OZ3D amounted to $8 / €7.5 million, but only five percent was actually used for production purposes, the rest being spent on “big salaries, commissions, overhead for a fancy office, and other expenses,” the investigation revealed.
The victims were contacted based on marketing lists purchased by the two administrators of the studio (Christopher Blauvelt, 59, and David Pritchard, 67) and staff ran their persuasion tactics from provided scripts.
Gigapix would be presented as a highly successful animation company, similar to Pixar Animation Studios owned by Apple, and investing in it would generate large profit in less than 18 months as a result of developing projects.
“Fronters” hooked the victim, “closers” collected the funds
The telemarketers, called “fronters,” told lies and half-truths in their money soliciting speech. When a victim fell for the deceptive discourse they would be handled by a “closer,” who was responsible for collecting the money.
FBI Special Agent Special Agent Eric Potocek said that Gigapix “took money from older people and from others who clearly could not afford to lose it. People lost their homes and had their dreams of retiring evaporate.”
Gigapix was founded in 2002 by Blauvelt, who held the CEO position; he received a sentence for eight years in jail. Pritchard became a partner in 2006 and acted as president of the company; he received a jail sentence for five years. Two of the closers were also convicted for fraud on February 23.