Debra Wong Yang
United States Attorney
Central District of California
United States Courthouse
312 North Spring Street
Los Angeles, California 90012
October 6, 2005
Thom Mrozek (213) 894-6947
Los Angeles, CA - A Van Nuys man was arrested this afternoon on federal mail fraud charges related to an alleged investment scam in which he collected approximately $20 million 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, was arrested after being named in an eight-count indictment returned Wednesday by a federal grand jury in Los Angeles.
According to the indictment, from late 1999 through 2001, Gharakhanian, used his company, the Glendale-based National Investment Enterprises, Inc., to raise approximately $20 million from investors. Gharakhanian allegedly 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 approximately $5 million.
The charges contained in an indictment are only allegations. A defendant is presumed innocent unless and until proven guilty in a court of law.
If he is convicted of all eight counts in the indictment, Gharakhanian faces a statutory maximum sentence of 40 years in federal prison.
Gharakhanian is expected to make his initial court appearance tomorrow in United States District Court in Los Angeles.
In 2004, the United States Securities and Exchange Commission filed suit against Gharakhanian and his company. The SEC secured a $20 million judgement against Gharakhanian and his company (see: http://www.sec.gov/litigation/litreleases/lr18677.htm).
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.
Release No. 05-142
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