Zicam inventor accused of defrauding Lucille Ball’s ‘Desilu’

The Redondo Beach man claimed to be wealthy – in the 1990s he invented Zicam, a popular cold remedy – and, he told investors, he had a tempting offer.

It all started with a name: Desilu Studios Inc.

Charles Hensley, 68, started using the trade name in 2016. It bore a striking resemblance to Desilu Productions Inc., the former production company operated by Lucille Ball and her husband Desi Arnaz.

He approached investors, hoping to tap into old Hollywood nostalgia and saying the company was ready to produce new content. He told them that he supported the company with his personal fortune and that the company was valued at $11 billion.

He also included a second company in the pitches, Migranade Inc., which he said was valued at more than $50 million.

But the companies were “little more than shell companies,” part of a scam that defrauded investors of at least $331,000, federal authorities said Wednesday.

The money went for personal expenses, including trips to Las Vegas, prosecutors said.

In a civil case also filed in U.S. District Court on Wednesday, the U.S. Securities and Exchange Commission alleged that Hensley and Desilu Studios raised approximately $596,360 from at least 21 investors.

The alleged scam took place from August 2017 to May 2018, according to a 12-count federal grand jury indictment.

Hensley initiated investments and got others to invest in companies such as Desilu Studios and Migranade, and offered to use stock in his companies to acquire shares in “at least some” of the companies he was targeting, according to the indictment.

“Hensley falsely asserted to investors that he had obtained the rights to the Desilu trademark,” according to the SEC court filing. “Hensley attracted investors by claiming that he was reviving the Desilu brand through Desilu Studios, which claimed to be a modern entertainment company engaged in film and television production, merchandising, content delivery, theme parks and entertainment. cinemas.”

He also falsely told investors that the company was “blessed” by Lucie Arnaz, the daughter of Desi Arnaz and Lucille Ball, according to the SEC.

Hensley did not own any intellectual property, and his claims of revitalizing the studio — and possessing substantial wealth — were also false, federal prosecutors said.

“He was not extremely wealthy, had few assets, and repeatedly forfeited checks and overdrafts in bank accounts to obtain cash and pay expenses,” the indictment states.

In his scheme, Hensley allegedly went so far as to claim that Desilu Studios was about to go public and that the company’s shares were worth more than face value, prosecutors said. He reportedly told investors the stock would rise in value following an initial public offering.

“In fact, according to the indictment, none of this was accurate and Hensley stole someone’s identity to register himself as CFO of Desilu Studio by donating material,” said the prosecutors.

The scheme went beyond taking money from investors, according to the US attorney’s office. In some cases, Hensley allegedly convinced owners and managers to sell their businesses in exchange for worthless Desilu shares.

“The indictment further alleges that Hensley touted these purchases to individual investors, further misleading them about his alleged acquisitions of valuable assets,” prosecutors said.

Hensley was charged with 11 counts of wire fraud and one count of aggravated impersonation, according to the U.S. Attorney’s Office for the Central District of California.

Hensley could not be reached for comment. A spokesperson for the U.S. Attorney’s Office said Hensley was in the process of hiring a defense attorney, but none were listed in court records.

If convicted of the recent criminal charges, Hensley faces a maximum statutory sentence of 20 years in federal prison for each count of wire fraud, plus a mandatory two-year prison term for the theft count. of aggravated identity, prosecutors said.

Court documents revealed that Hensley had a history of legal troubles.

He was sentenced to three years probation in 2012 after pleading guilty to a federal criminal charge of illegally marketing and selling VIRA 38, an unapproved herbal remedy he says could prevent and treat bird flu.

And according to the SEC’s recent civil case, the Arizona Corporation Commission filed a cease and desist order against him and Migranade in 2021.

Hensley claimed the company produced an over-the-counter migraine remedy, according to the civil case. The Arizona commission ordered him to pay an administrative penalty and restitution to investors.

In October 2016, Hensley filed an application with the United States Patent Office requesting the “Desilu” trademark, as per the SEC case.

But it omitted a critical fact from the claim: CBS Studios had “continuously used” the Desilu brand “for decades in its television programming,” the civil case said. The patent office, however, approved Hensley’s application in January 2018.

Three months later, Desilu Studios sued CBS “to establish its ownership and use of the ‘Desilu’ trademark”, but it dropped the case on October 21 of that year, according to the SEC case.

Nine days later, CBS filed a countersuit against Desilu Studios, Hensley and Desilu Corp. alleging multiple claims, including trademark infringement.

The CBS case ended in May 2019 when the court barred “Desilu Studios from using the “Desilu” trademark and ordered that Desilu Studios be dissolved or remove “Desilu” from its name, according to the SEC.

Los Angeles Times

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