3-YEAR TERM LIKELY FOR PONZI SCHEMER.Byline: Alex Dobuzinskis Staff Writer A Van Nuys man pleaded guilty Wednesday to defrauding dozens of investors of at least $2.5 million under a plea bargain plea bargain n. in criminal procedure, a negotiation between the defendant and his attorney on one side and the prosecutor on the other, in which the defendant agrees to plead "guilty" or "no contest" to some crimes, in return for reduction of the severity of the reached with federal prosecutors. Melkon Gharakhanian, 44, also known as Mike Garian, pleaded guilty to one count of mail fraud. He faces up to five years in prison, but prosecutors will seek three years when he is sentenced on May 1. Prosecutors say they will drop seven additional charges as part of the plea deal. Authorities said Gharakhanian failed to tell investors he had filed for personal bankruptcy Personal bankruptcy is a procedure which, in certain jurisdictions, allows an individual to declare bankruptcy. In other jurisdictions, bankruptcies are reserved for corporations. before establishing National Investment Enterprises Inc. The Glendale company defrauded more than 40 victims between 1999 and 2001 in what prosecutors say was a classic Ponzi scheme A fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time. - using money from new investors to pay earlier investors. ``To the extent the money was misused mis·use n. Improper, unlawful, or incorrect use; misapplication. tr.v. mis·used, mis·us·ing, mis·us·es 1. To use incorrectly. 2. To mistreat or abuse. See Synonyms at abuse. Adj. , it was not necessarily put in his pocket. However, there's no doubt that Mr. Gharakhanian lived a very comfortable lifestyle,'' Assistant U.S. Attorney Michael Wilner said outside the courtroom at U.S. District Court in downtown Los Angeles Downtown Los Angeles is the central business district of Los Angeles, California, located close to the geographic center of the metropolitan area. The sprawling, multi-centered megacity is such that its downtown core is often considered just another district like Hollywood or . Investors in National Investment were led to believe that their money was being put in mostly stocks and initial public offerings for high-tech stocks High-tech stock Stocks of companies operating in high-technology fields. and Internet companies. Part of the money was used to pay old investors, as in other Ponzi schemes. Money was also used to pay salaries and other expenses at National Investment and to invest in certain securities about which investors were never told. ``He did not personally enrich himself,'' John Yzurdiaga, Gharakhanian's attorney, said after the court hearing. Gharakhanian, who is free on $100,000 bond, had a small staff, none of whom were charged in the case. He also told investors about an individual named Bika Balian, who he said was overseeing finances, but Balian did not exist, Wilner said. Most of the investors were from the San Fernando Valley San Fernando Valley Valley, southern California, U.S. Northwest of central Los Angeles, the valley is bounded by the San Gabriel, Santa Susana, and Santa Monica mountains and the Simi Hills. , including many Armenian-Americans from Glendale. The scheme could have netted as much as $10 million. In 2004, the U.S. Securities and Exchange Commission secured a $2.6 million judgment against Gharakhanian, but he has been unable to pay it. Gharakhanian is Canadian and could eventually be deported as a result of his conviction. Alex Dobuzinskis, (818) 546-3304 alex.dobuzinskis(at)dailynews.com |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion