LAWFUEL – Law News Service – A Beverly Hills man who orchestrated a series of “bust-out” schemes in which several companies were taken over and their credit lines were abused was convicted today of a series of federal fraud and money laundering charges.
Reza Bahram Tabatabai, 51, was found guilty by a federal judge who presided over a four-week bench trial. The evidence phase of the trial concluded on July 11 and this afternoon United States District Judge Florence-Marie Cooper found Tabatabai guilty of conspiracy, seven counts of interstate transportation of fraudulently obtained property, six counts of mail fraud, eight counts of wire fraud, conspiracy to commit money laundering and 33 counts of money laundering.
A bust-out scheme is a fraud in which the identity and credit line of a business are used to obtain loans and goods with no intention of paying for the money or merchandise. In this case, Tabatabai and several co-defendants purchased established businesses so they could make large purchases of goods using the companies’ existing lines of credit. While some payments were made in order to secure larger lines of credit, lenders to the four companies lost more than $8 million. The goods sold to the companies were re-sold at discounted prices to quickly generate profits for the participants in the scheme.
The companies busted out in the schemes run by Tabatabai were located in Los Angeles and Beverly Hills, as well as the Santa Barbara, Denver and Atlanta metropolitan areas.
The investigation in this case started when the FBI received a complaint from a company that did business with Impaq Micro, a Norcross, Georgia company that had been a legitimate computer wholesaler until it was purchased by Tabatabai under an assumed name. As part of the sales agreement, the previous owners of Impaq Micro were prohibited from telling its vendors about the change in ownership. After purchasing the business, Tabatabai and his co-conspirators made efforts to increase the line of credit available to the business and then obtained a large amount of merchandise on the credit. The merchandise was shipped to a warehouse in California, and was sold in exchange for cash and cashiers checks. The banks never received payments on the line of credit. By the end of August 2004 – less than four months after Tabatabai and the others had taken over the company – Impaq Micro had been abandoned, leaving unpaid bills of approximately $3 million.
The evidence at trial showed that Tabatabai and his co-conspirators engaged in a series of complex monetary transactions to both conceal and promote the fraudulent scheme. Tabatabai controlled numerous bank accounts, held in the names of numerous businesses, in which he concealed the proceeds of the fraudulent conduct.
In her written verdict today, Judge Cooper stated: “Defendant was actively involved as a conspirator in bust-out schemes with his co-conspirators, beginning in approximately 2002 with the operation of the Tsunami Corporation, continuing through DT&M, Channel Islands/Surfside, and ending with Impaq Micro.”
Judge Cooper later added: “Defendant took pains to hide his identity while participating in the bust-out schemes, and utilized numerous bank accounts in assorted names to deposit his share of proceeds of the fraudulent transactions. The money trail was elaborate, complex, and clever, but ultimately it was unraveled by the IRS agents in charge of the investigation. It clearly revealed defendant’s participation in the creation, brief operation, and destruction of the companies, and his share of the ill-gotten gains.”
Judge Cooper is scheduled to sentence Tabatabai on October 23. At sentencing, Tabatabai faces a potential penalty of several hundred years in federal prison. Each count of money laundering carries a statutory maximum penalty of 20 years in prison.
Previously in this case, three defendants pleaded guilty to fraud and money laundering charges. They are:
Edmond Masjedi, 35, of Beverly Hills;
Touraj Benshian, 38, of Los Angeles; and
Mohammad Majidi, 42, of Los Angeles.
These defendants are scheduled to be sentenced in the fall.
Two other defendants have been indicted, but they have not been apprehended by federal authorities. Masoud Sabet, 52, and Masoud Rahmani, 34, both of Encino, are fugitives who are believed to be in Iran.
The investigation in this case was conducted by the Federal Bureau of Investigation, IRS-Criminal Investigation Division and the Beverly Hills Police Department.
CONTACT: Assistant United States Attorney Eileen M. Decker
Release No. 06-100List your legal jobs on the LawFuel Network