Houston businessman indicted on $32 million securities and wire fraud

After surrendering to FBI officials early Thursday, a local CEO appeared before a federal judge in Houston three times Thursday to arrange bond on allegations he participated in a $32 million securities and wire fraud scheme.

By the afternoon, Ray Charles Davis, 62, had executed a $50,000 secured bond along with an additional $200,000 unsecured bond. He agreed he would not discuss business matters with two family members who are employees at the company and have been identified as potential witnesses and possibly co-conspirators.

Davis, who was CEO of Behavioral Recognition Systems Inc., a technology company, faces a 21-count indictment handed down by a grand jury Dec. 7, for embezzling money from his company, defrauding people who invested in the Houston firm and leading them to purchase shares based on false and misleading statements.

Specifically, federal prosecutors say he made false statements to investors regarding his salary, how the proceeds of their investments would be used and the financial condition of the company, defrauding his investors of $32 million and unlawfully embezzling more than $11 million from his business.

The company sells the technology behind business security systems, including video monitoring, artificial intelligence, facial recognition software and other products.

At the afternoon bond hearing Davis, who uses a feeding tube and suffers from hypoglycemia, was led into the courtroom by U.S. Marshals wearing ankle cuffs.

Davis pleaded not guilty to the charges and entered into a bond agreement. His wife was going to try to secure $50,000 before the offices shut down for the day. The judge seized his passport, but granted him permission to leave Houston to attend a Miami boat show so that he could attempt to sell an antique boat.

Defense attorney Dick DeGuerin said his client is not guilty of the charges.

"There's a lot more to this than is in the indictment," he said. "We're going to fight this, it's going to take awhile, it's going to be complex."

Davis and his son Charles face an ongoing civil suit over related matters.

Davis appeared in the morning in shackles and handcuffs in a wearing a charcoal business suit and white dress shirt and shoes.

He faces a maximum of 20 years in prison on the securities fraud charge and on each of the 20 counts of wire fraud.

The FBI led the investigation along with the Securities and Exchange Commission.