Investor reaches plea deal over fraud

7/19/2006

An indicted Toledo investment executive who steered his wealthy clients into everything from movie financing to a chain of rib joints has reached a plea deal with federal prosecutors.

William C. Davis has agreed to plead guilty to multiple counts of mail fraud and bank fraud, his Ann Arbor attorney confirmed yesterday.

The offenses to which he will admit guilt carry a sentence of between 7 years and 11 years in prison, said attorney John Minock. Prosecutors and defense lawyers have not reached agreement on how much time the 60-year-old will spend in jail.

Besides fraud charges, Mr. Davis agreed to admit to misappropriating funds from a pension fund, his attorney said.

Word of the development in the year-old criminal case surfaced yesterday when the two sides jointly filed a motion asking U.S. Judge James Carr to set a hearing at which Mr. Davis would change his not-guilty plea.

No date has been set.

Prosecutor Thomas Karol, an assistant U.S. attorney, declined comment on the development.

The former chairman of the defunct Continental Capital Corp., Sylvania, was scheduled to go on trial Oct. 3 for allegedly defrauding at least 50 customers of more than $7 million between 1996 and 2003.

Prosecutors alleged that the one-time trustee of the former Medical College of Ohio forged client signatures, made unauthorized securities trades, sold unregistered securities, and engaged in a Ponzi scheme in which money of new investors was used to pay old investors.

Mr. Davis, whose clients included some of northwest Ohio's wealthiest and most prominent residents, has been in the Federal Correctional Institution in Milan, Mich., since November, when prosecutors accused him of new fraud charges while he awaited trial on the former counts.

The man who once socialized with local business leaders, physicians, and other well-heeled clients is without assets and is being represented by a public defender.

His attorney said Mr. Davis' problems began as a result of business reverses at Continental Capital, which arranged venture capital financing and offered traditional investment services.

"People in business encounter financial difficulties and hope they can turn things around if they can just stay in business long enough," Mr. Minock said.

"The problem is that, sometimes, instead of getting better, losses multiply."

In one case in 1999, Mr. Davis helped arrange a meeting during which a group of affluent local investors agreed to invest in a low-budget spoof of life in Michigan's Upper Peninsula by actor Jeff Daniels.

The investment advisory arm of Continental Capital was later declared insolvent by the quasi-governmental U.S. Securities Investor Protection Corp. and was liquidated under the supervision of a federal bankruptcy judge.

Mr. Davis also is the focus of a U.S. Securities and Exchange Commission civil suit accusing him of widespread wrongdoing. That case is pending.

Contact Gary Pakulski at:

gpakulski@theblade.com

or 419-724-6082.