SANTA ANA – An Irvine man expected to be arraigned in federal court Monday is accused of working on another investment scheme while out on bail on federal charges of bilking 40 investors of more than $1.8 million in a scam to market a product to combat childhood obesity.
A second grand jury indictment adds nine additional counts of mail and wire fraud, money laundering and committing an offense while on release for Charles “Chuck” Davis. The indictment alleges that Davis defrauded about 20 investors of more than $900,000 with promises of developing and marketing a product to treat diabetes.
For the earlier 2010 indictment related to a child obesity product development and marketing, Davis, then 53, was accused of two counts of mail fraud, five counts of wire fraud and three counts of money laundering.
If convicted on those counts alone, Davis would have faced a maximum sentence of 170 years in federal prison, according to a previous news release from the U.S. Attorney’s Office.
Davis was notified of the potential effects of committing new offenses while on pretrial release after he pleaded not guilty to the earlier charges in December 2010, according to court documents.
The earlier case stemmed from Davis signing agreements with investors promising to provide a 15 percent interest on investment over a 13-month period, according to documents.
The indictment alleged his Newport Beach-based LifeRight Holdings Inc. was going to develop and use infomercials to market a product to combat childhood obesity, the news release said.
The new scheme related to a product to be developed and marketed to treat Type II diabetes began in December 2009 and continued to about September 2011, according to a federal indictment. This time investors were promised a 15 percent interest at the end of a two-year period for money invested in another of Davis’ companies, DT2 Health Solutions Inc., court documents say.
The indictment alleges Davis instead used investor funds for personal expenses, including payments to himself, family members and girlfriends; to buy clothing, jewelry and other items; and for rent, utilities and credit card payments. Davis also used the money for legal fees for lawyers representing him in lawsuits brought against him, the document alleges.