A cold-remedy inventor, Lucille Ball's old studio and an alleged investment scheme. What could go wrong?




  • In US
  • 2022-08-12 13:04:11Z
  • By LA Times
Zicam inventor Charles Hensley is charged with bilking investors out of hundreds of thousands of dollars in a scheme that involved his fraudulent use of the \"Desilu\" brand of Lucille Ball, above, and husband Desi Arnaz. (CBS Photo Archive/Getty Images)
Zicam inventor Charles Hensley is charged with bilking investors out of hundreds of thousands of dollars in a scheme that involved his fraudulent use of the \"Desilu\" brand of Lucille Ball, above, and husband Desi Arnaz. (CBS Photo Archive/Getty Images)  

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

It began with a name: Desilu Studios Inc.

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

He approached investors, hoping to tap into the nostalgia of old Hollywood and claiming the company was set to produce new content. He told them that he was backing the venture with his personal wealth and that the business was valued at $11 billion.

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

But the businesses were "little more than shell corporations," part of a scam that bilked investors out of at least $331,000, federal authorities alleged Wednesday.

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

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 about $596,360 from at least 21 investors.

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

Hensley pitched investments and got other people to pitch investments in companies including Desilu Studios and Migranade, and offered to use stock in his companies to acquire shares in "at least some" of the companies he targeted, according to the criminal indictment.

"Hensley falsely claimed to investors that he had obtained the rights to the Desilu brand," according to the SEC's court filing. "Hensley lured investors by claiming that he was reviving the Desilu brand through Desilu Studios, which purported to be a modern entertainment company engaged in film and television production, merchandising, content streaming, theme parks, and cinemas."

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

Hensley owned no intellectual property, and his claims of revitalizing the studio - and of possessing substantial wealth - were also untrue, federal prosecutors said.

"He was not extremely wealthy, had few assets, and was repeatedly bouncing checks and overdrawing bank accounts to get cash and pay expenses," the criminal indictment stated.

In his scheme, Hensley allegedly went as far as claiming that Desilu Studios was about to go public and that the company's stock was worth more than its face value, prosecutors said. He allegedly told investors the stock would increase 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 list as Desilu Studio's chief financial officer in offering materials," prosecutors said.

The scheme went beyond taking money from investors, according to the U.S. attorney's office. In some cases, Hensley allegedly convinced owners and executives to sell their companies in exchange for worthless Desilu stock.

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

Hensley was charged with 11 counts of wire fraud and one count of aggravated identity theft, 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 was listed in court filings.

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

Court filings revealed that Hensley has a history of legal troubles.

He was sentenced to three years of probation in 2012 after pleading guilty to a federal criminal charge for illegally marketing and selling VIRA 38, an unapproved herbal remedy that he claimed 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 was producing an over-the-counter migraine remedy, the civil case stated. The Arizona commission ordered him to pay an administrative penalty and restitution to investors.

In October 2016, Hensley filed an application with the U.S. Patent Office asking to trademark "Desilu," according to the SEC's case.

But he left a critical fact out of the application: CBS Studios had been "continuously using" the Desilu trademark "for decades in its television programming," the civil case stated. The patent office, however, approved Hensley's request in January 2018.

Three months later, Desilu Studios sued CBS "to establish its ownership and use of the 'Desilu' mark," but it dropped the case on Oct. 21 that year, the SEC's case stated.

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

CBS' case concluded in May 2019 when the court barred "Desilu Studios from using the 'Desilu' mark and ordered that Desilu Studios be dissolved or remove 'Desilu' from its name," according to the SEC.

This story originally appeared in Los Angeles Times.

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