Local Man Arrested for $30 Million Securities and Wire Fraud Scheme

[nitpicker]

https://www.justice.gov/usao-sdtx/pr/local-man-arrested-30-million-securities-and-wire-fraud-scheme

Department of Justice
U.S. Attorney’s Office
Southern District of Texas

FOR IMMEDIATE RELEASE
Thursday, December 14, 2017

Local Man Arrested for $30 Million Securities and Wire Fraud Scheme

HOUSTON – A 62-year-old Houston man has been taken into custody following the return of a federal indictment charging him for his role in a securities fraud and wire fraud scheme involving more than $30 million, announced Acting U.S. Attorney Abe Martinez. A grand jury returned a 21-count indictment Dec. 7, 2017, against Ray Charles Davis. He was taken into custody this morning and is expected to make his initial appearance before U.S. Magistrate Judge Dena H. Palermo at 10:00 a.m. today.

According to the indictment, the scheme involved defrauding investors in Behavioral Recognition Systems Inc. (BRS) by making false and misleading statements to investors in order to fraudulently induce them to purchase shares of BRS. He also unlawfully embezzled money from BRS, according to the charges.

Pursuant to the scheme, Davis allegedly made false statements to investors regarding his salary, how the proceeds of their investments would be used and the financial condition of BRS. As a result of the scheme, Davis defrauded investors out of a total of approximately $32 million and unlawfully embezzled more than $11 million from BRS during the scheme, according to the indictment.

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[nitpicker]

1. Houston tech company accuses former CEO of stealing millions for antiques, lavish items

https://www.bizjournals.com/houston/news/2017/02/09/houston-tech-company-accuses-former-ceo-of.html

Houston tech company accuses former CEO of stealing millions for antiques, lavish items

The founder and former CEO of Houston-based BRS Labs Inc., now known as Giant Gray Inc., is being accused by the company of allegedly stealing more than $15 million from his former company for lavish goods and high-end antiques. The 22-page lawsuit was filed in the Harris County District Court on Feb. 2 on behalf of Giant Gray Inc. by Andrew Edison, a lawyer at Edison, McDowell & Hetherington LLP, alleging fraud and breach of fiduciary duty, among other charges.
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The company's lawsuit claims former CEO Ray Davis and his son Charles Davis used "an elaborate scheme to create fraudulent and forged invoices to make payments to fictitious companies, and by requiring Giant Gray's payment of personal expenses unrelated to the company's business" to allegedly take more than $15 million from the company. The time period of the alleged scheme was between 2005, when BRS was founded, and July 2015, when Ray Davis sold his controlling interest in the firm, according to the suit.
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BRS Labs, which specializes in security analytics, changed its name to Giant Gray in 2016 after Ray Davis exited the company. The findings mentioned in the suit were discovered after Davis exited the company and individuals other than Ray and Charles Davis were given complete access to the company's financials, the suit said.

Giant Gray alleges that Ray Davis authorized the company to make more than 100 payments to several different organizations under the auspices of various services. However, the suit claims the funds went instead to personally enrich Ray and Charles Davis.
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[nitpicker]

2. Link to the Houston Chronicle

http://www.chron.com/business/article/Software-company-alleges-former-executives-stole-10921283.php