LAWFUEL – The Law News Network – 11 January – A Van Nuys man pleaded guilty this afternoon to a federal mail fraud charge for running an investment scam in which he collected millions of dollars from primarily Armenian-American victims who thought their money was being used to purchase various securities in the technology sector.
Melkon Gharakhanian, who used the name “Mike Garian,” 43, pleaded guilty this afternoon before United States District Judge George P. Schiavelli.
According to court documents, including a plea agreement filed today, from late 1999 through 2001, Gharakhanian used his company, the Glendale-based National Investment Enterprises, Inc., to raise approximately $20 million from investors. Gharakhanian falsely told investors that he would use their money to purchase various securities for their accounts; that he had an “inside line” to upcoming IPOs, particularly for Internet and other technology-related companies; and that he could deliver large profits quickly. Gharakhanian and National Investment sent investors false monthly account statements that showed the purchase of coveted IPO shares and other securities on their behalf.
However, during the period from approximately December 1999 through September 2000, National Investment did not own the type and quantity of securities that were represented on the investors’ account statements. Rather, Gharakhanian fraudulently misappropriated investor funds for his own personal use and to pay the operating expenses of National Investment.
Some of the investors recouped most or all of their initial investments. However, when National Investment collapsed in 2001, investors lost millions of dollars. For purposes of sentencing, Gharakhanian admits that he caused losses of at least $2.5 million and as much as $10 million.
Judge Schiavelli is scheduled to sentence Gharakhanian on May 1, at which time the defendant faces a sentence of up to five years in federal prison.
In 2004, the United States Securities and Exchange Commission filed suit against Gharakhanian and his company. The SEC secured a $2.6 million judgement against Gharakhanian and his company (see: ).
The criminal case against Gharakhanian is the result of an investigation by the Federal Bureau of Investigation and the United States Postal Inspection Service. The Pacific Regional Office of the Securities and Exchange Commission provided substantial assistance.
