The inventor of Zicam was accused of using Lucille Ball’s “Desilu” in fraud

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

It started with the name: Desilu Studios Inc.

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

He approached investors hoping to tap into the nostalgia of old Hollywood and saying the company was going to create new content. He told them that he was backing the venture with his personal fortune and that the business was valued at $11 billion.

He also included another business, Migranade Inc., in the bids, which he said was valued at more than $50 million.

But the businesses were “no more than shell corporations,” part of a scam that defrauded investors of at least $331,000, federal authorities alleged Wednesday.

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

In the 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 fraud ran from August 2017 to May 2018, according to a 12-count federal grand jury indictment.

According to the criminal indictment, Hensley raised investments and induced other people to invest in companies, including Desilu Studios and Migranade, and offered to use stock in his companies to buy stock in “at least some” of the companies he targeted.

“Hensley misrepresented to investors that he had obtained the rights to the Desilu brand,” the SEC said in a filing. “Hensley lured investors by claiming he was reviving the Desilu brand through Desilu Studios, which purported to be a modern entertainment company involved in film and television production, merchandising, streaming content, theme parks and cinemas.”

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

Hensley did not own the intellectual property, and his claims about rebuilding the studio and possessing significant wealth were also false, federal prosecutors said.

“He was not very wealthy, had few assets, and repeatedly bounced checks and overdrawn bank accounts to obtain cash and pay expenses,” the criminal complaint said.

In his scheme, Hensley allegedly went so far as to claim that Desilu Studios was going public and that the company’s stock was worth more than its face value, prosecutors said. He allegedly told investors that the stock would increase in value after the initial public offering.

“Actually, according to the indictment, none of this was accurate, and Hensley stole someone’s identity to identify himself as Desilu Studio’s CFO while offering the materials,” prosecutors said.

According to the US Attorney’s Office, the scheme went beyond getting money from investors. In some cases, Hensley allegedly convinced owners and executives to sell their companies in exchange for worthless Desilu stock.

“The indictment also alleges that Hensley advertised these purchases to 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 spokesman for the U.S. Attorney’s Office said Hensley is currently hiring an attorney, but court documents did not list one.

If convicted of the recent criminal charges, Hensley faces a maximum sentence of 20 years in federal prison on each fraud count, plus a mandatory two-year sentence on the aggravated identity theft charge.

Court documents showed that Hensley has a history of legal problems.

In 2012, he was sentenced to three years of probation after pleading guilty to federal criminal charges for illegally marketing and selling VIRA 38, an unapproved herbal remedy that he claimed could prevent and treat bird flu.

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

Hensley claimed that the company makes an over-the-counter migraine medication, which is listed in the civil case. The Arizona state commission ordered him to pay an administrative fine and reimburse investors.

In October 2016, Hensley filed with the US Patent Office to trademark “Desilu,” according to the SEC filing.

But he left an important fact out of the filing: CBS Studios has “continuously used” the Desilu trademark “for decades in its television programming,” according to the civil suit. However, the patent office 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 October 21 of that year, according to the SEC filing.

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

The CBS case ended in May 2019 when the court “enjoined Desilu Studios from using the “Desilu” mark and ordered Desilu Studios to dissolve or remove “Desilu” from its name,” according to the SEC.

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