3 Additional Members of Alleged Fraud Ring Based in San Fernando Valley Arrested on Charges of Exploiting COVID-Relief Programs
LOS ANGELES (STL.News) Expanding a case in which four people were indicted last year, federal authorities have charged four new defendants with participating in a scheme that allegedly submitted more than 150 fraudulent loan applications seeking nearly $22 million in COVID-19 relief funds authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Justice Department announced today.
Three of the new defendants were arrested Thursday as the result of a 33-count superseding indictment that charges a total of eight defendants with using fake, stolen or synthetic identities to submit fraudulent applications for loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Relief Program (EIDL) and the Paycheck Protection Program (PPP) under the CARES Act.
The three defendants arrested Thursday are: Manuk Grigoryan, 27, of Sun Valley; Edvard Paronyan, 40, of Granada Hills; and Vahe Dadyan, 41, of Glendale. All three were arraigned on the superseding indictment Thursday afternoon in United States District Court in downtown Los Angeles. During court appearances that continued into the evening, a United States Magistrate Judge released all three on bond and ordered them to stand trial on May 4.
A fourth new defendant charged in the superseding indictment – Arman Hayrapetyan, 38, of Glendale – is still being sought by federal authorities.
The superseding indictment, which was filed on Tuesday, adds the four new defendants to an indictment filed in November that led to the arrests of co-defendants Richard Ayvazyan, Marietta Terabelian, Artur Ayvazyan and Tamara Dadyan.
According to the superseding indictment, the eight defendants conspired together, and with others, as part of a disaster-relief loan fraud ring that submitted fraudulent loan applications that often included fake identity documents, tax documents and payroll records. The eight defendants “submitted and caused the submission of at least 151 fraudulent PPP and EIDL loan applications seeking a total of at least $21.9 million in PPP and EIDL proceeds from the SBA and at least 11 financial institutions, and received a total of at least $18 million in PPP and EIDL loan proceeds from the SBA and financial institutions,” the indictment states.
The defendants allegedly used the fraudulently obtained funds as down payments on luxury homes in Tarzana, Glendale and Palm Desert. They also used the funds to buy gold coins, diamonds, jewelry, luxury watches, fine imported furnishings, designer handbags and clothing, cryptocurrency, and securities, according to the indictment.
All of the defendants named in the superseding indictment are charged with conspiracy to commit wire fraud and bank fraud, as well as conspiracy to commit money laundering. Each defendant is named in various other counts in the indictments which allege wire fraud, bank fraud, money laundering and aggravated identity theft.
The superseding indictment alleges that Richard Ayvazyan and Tamara Dadyan committed crimes after they were released on bond in this case. The superseding indictment further alleges that Richard Ayvazyan continued to use his alias “Iuliia Zhadko” to launder the proceeds of the scheme, including by using the money to buy cryptocurrency and securities. As alleged, Tamara Dadyan repeatedly lied to a bank as part of a scheme to unlawfully obtain disaster-relief funds that had been frozen in an account that she had fraudulently opened using a stolen identity.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
The investigation in this case is being conducted by the FBI, IRS Criminal Investigation, the Small Business Administration’s Office of Inspector General, and the Federal Housing Finance Agency – Office of Inspector General.
This case is being prosecuted by Assistant United States Attorneys Brian Faerstein of the Environmental and Community Safety Crimes Section and Scott Paetty of the Major Frauds Section, and Trial Attorney Christopher Fenton of the Justice Department’s Fraud Section.
The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP, and $10 billion in low-interest loans to small businesses through the EIDL program. In April 2020, Congress authorized more than $300 billion in additional PPP funding and $10 billion in additional EIDL funding, and in December 2020, Congress authorized another $284 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. PPP loan proceeds must be used by businesses for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses that are currently experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities and fixed-debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form.