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April 21, 2016Santa Ana, CA, United StatesFinancial Crimes

10 charged in international money laundering and ID theft scheme involving millions in fraudulent tax refunds

Hundreds of fake identities, fraudulent Armenian and Georgian Passports used to open bank accounts and mail drops across Southern California

SANTA ANA, Calif. – Federal authorities arrested five out of 10 defendants late Wednesday who have been charged in identity theft cases tied to an international money laundering scheme involving millions of dollars in fraudulently obtained federal income tax refunds.

The criminal complaints filed Tuesday in U.S. District Court and unsealed Wednesday charge the 10 defendants with participating in a money laundering ring that used hundreds of bank accounts opened with stolen identities to launder millions of dollars in fraudulently obtained tax refunds.

According to the affidavits supporting the complaints, the Internal Revenue Service has identified approximately 7,000 fraudulent tax returns related to this scheme that cumulatively sought about $38 million in refunds. The IRS issued about $14 million in refunds, and the money was deposited into and laundered through bank accounts used in the scheme. The fraudulent tax returns were filed and the bank accounts were opened with personal identifying information that had been stolen from thousands of victims.

The arrests are part of an ongoing investigation being conducted by IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Federal Bureau of Investigation. During Wednesday’s operation, the federal agencies receive substantial assistance from the Los Angeles Police Department, the Los Angeles International Airport Police Department, the Glendale and Santa Monica police departments.

“Stolen identity refund fraud schemes are a growing problem that victimize both the United States government and individuals who have tax returns fraudulently filed in their names,” said U.S. Attorney Eileen M. Decker. “We are devoting more resources to combat this problem and will continue to pursue organizations that engage in this type of fraud. These cases demonstrate that we will dismantle these criminal operations and stop schemes that target innocent Americans and steal taxpayers' money.”

The 10 defendants, each of whom was named in a separate criminal complaint, allegedly used fraudulent foreign passports to commit identity theft by opening numerous bank accounts and mailbox addresses with the stolen identities. According to the criminal complaints, they used fraudulent passports from the Republic of Armenia, Georgia, and the Czech Republic that had the names of identity theft victims, but the defendants’ photographs.

“Investigating refund fraud and identity theft is a top priority for IRS Criminal Investigation,” stated Anthony J. Orlando, acting special agent in charge for IRS Criminal Investigation. “Stealing identities and filing false tax returns is a serious crime that hurts innocent taxpayers. These arrests should serve as a strong warning to those who are considering similar conduct. Law enforcement is serious about investigating these crimes and holding accountable those who defraud the government.”

“The complexity and audacity of this scheme was truly astounding and illustrates the lengths to which fraudsters will go to game the system for financial gain,” said Mark Selby, acting special agent in charge for HSI Los Angeles. “Identity theft and tax fraud result in billions of dollars in losses every year in this country and cause incalculable heartache and financial harm to law-abiding consumers. We owe it to them to pursue these cases aggressively, making it clear that those who brazenly enrich themselves on the back of the American taxpayer, as these defendants allegedly did, will be held accountable for their crimes.”

The mailboxes and bank accounts were opened in cities throughout Los Angeles and Orange counties - including Newport Beach, Cypress, La Habra, Alhambra, Azusa, Covina, Encino, Los Angeles, Montebello, North Hollywood, Rowland Heights, Temple City and Glendale.

The five defendants taken into custody Wednesday are:

  • Eduard Astvatsatryan, 34, of Glendale, who allegedly opened at least 17 bank accounts and 14 mailbox addresses in different identities;
  • Hripsime Avagyan, 24, of Burbank, who allegedly opened at least six bank accounts and seven mailbox addresses in different identities;
  • Armen Mkrtchyan, 46, of Glendale, who allegedly opened at least two bank accounts and two mailbox addresses in different identities;
  • Sargis “Sergio” Tabadzhyan, 54, of West Hollywood, who allegedly opened at least 13 bank accounts and seven mailbox addresses in different identities; and
  • Artash Stepanyan, 31, of Glendale, who allegedly opened at least 14 bank accounts and six mailbox addresses in different identities.

The defendants arrested Wednesday were held overnight and were scheduled to make their initial court appearances Thursday afternoon in U.S. District Court in Santa Ana.

Authorities continue to search for the other five defendants. They are:

  • Mkhitar Mkrtchyan, 43, of Sylmar, who allegedly opened at least two bank accounts and two mailbox addresses in different identities;
  • Karen Pogosian, 45, of Sun Valley, who allegedly opened at least two bank accounts and two mailbox addresses in different identities;
  • Konstantin Galstyan, 23, of Sylmar, who allegedly opened at least four bank accounts and two mailbox addresses in different identities;
  • Jane Doe, who allegedly opened at least eight bank accounts and six mailbox addresses in different identities; and
  • John Doe, who allegedly opened at least four bank accounts and two mailbox addresses in different identities.

Federal authorities are seeking the public’s help in apprehending these defendants. Anyone with any information regarding their possible whereabouts is encouraged to contact IRS Criminal Investigation at 213-200-3083 or HSI at 1-866-DHS-2ICE.

A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

The identity theft charges alleged in the 10 complaints each carry a statutory maximum sentence of 15 years in federal prison and a fine of up to $250,000.

Updated: 04/22/2016