Criminal ring with SoCal ties swindled $25 million in COVID relief, small business loans, feds say
Fourteen people have been arrested on suspicion of engaging in a years-long scheme to fraudulently obtain more than $25 million in COVID-19 relief funds and government-backed small business loans.
During the arrests Wednesday, law enforcement seized about $20,000 in cash, two money-counting machines, paper cash bands, multiple cellphones, laptops, two loaded semi-automatic 9 mm handguns and boxes of ammunition, authorities said.
"This transnational criminal network sought to defraud the government of millions of dollars and almost succeeded," Homeland Security Investigations Los Angeles Acting Special Agent in Charge John Pasciucco said in a statement.
The agency "is continuing to identify these criminal groups looking to profit from the pandemic and will use all available resources to criminally prosecute or remove them from the country," he added.
A total of 18 people have been charged with felonies in connection with the alleged scheme — including conspiracy to defraud the government with respect to claims; making false, fictitious, or fraudulent claims; wire fraud and attempted wire fraud; bank fraud and attempted bank fraud; money laundering conspiracy, laundering of monetary instruments, engaging in monetary transactions in property derived from specified unlawful activity, and structuring financial transactions to evade reporting requirements, according to federal prosecutors.
Four of the 18 people charged have not yet been arrested and are believed to be in Armenia, prosecutors said.
Prosecutors allege Vahe Margaryan, 42, of Tujunga, orchestrated the scheme to defraud banks and the Small Business Administration's Preferred Lender Program by directing the owners of sham corporations to open bank accounts and create phony documents to support loan applications to buy other sham corporations.
The scheme allegedly began before the pandemic in 2018 and lasted until January, authorities said.
Read more: U.S. border agent is charged in COVID-19 business loan fraud scheme, authorities say
In probable cause statements filed in federal court, investigators wrote that the defendants laundered the money through multiple bank accounts and ultimately used the cash for personal expenses.
In one instance, prosecutors allege Margaryan — who also went by the name William McGrayan — told a person identified only as F.N. that he had started a businesses called Music E Solutions for the man to sell guitar lessons online. In May 2019, Margaryan suggested the company's name be changed to Mobile Auto Repair, Inc., and directed F.N. to open bank accounts for the businesses, with F.N. as the sole signatory.
F.N. told investigators he thought this was suspicious and questioned whether it was legal. Margaryan assured him it was "necessary to help qualify for loans and that it was legal," investigators wrote in a probable cause statement. F.N. told authorities they had no intention of operating a car repair business.
Authorities say Margaryan directed F.N. to deposit checks into the company's account and then move them to other accounts and seek out bank loans, as well as paycheck protection loans and economic injury disaster loans during the pandemic.
Read more: 5 arrested for collecting thousands in fraudulent FEMA claims from Palisades, Eaton fires
F.N. described Margaryan's actions as "scary" and "unhinged," a federal agent wrote in the probable cause statement.
"F.N. became increasingly afraid of [Margaryan] as [Margaryan's] tone became more belligerent when F.N. questioned [Margaryan] about whether what they were doing was legal," the agent wrote.
Also charged in the scheme were Sarkis Sarkisyan, Aksel Markaryan, Ashot Bejanyan, Jack Aydinian, Taron Musayelyan, Hovannes Hovannisyan, Mery Babayan, Anahit Sahakyan, Felix Parker, Rudik Yengibaryan, Yohan Vachyan, Khachatur Nikoghosyan and Boris Sahakyan, court records show.
The four other defendants believed to be overseas have not been publicly named.
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This story originally appeared in Los Angeles Times.
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