Fourteen people were arrested in connection with a massive scheme to fraudulently obtain over $25 million in COVID-19 relief funds and federally guaranteed small business loans, according to US Immigration and Customs Enforcement.
The accused criminal network, with some members believed to be in Armenia, was involved in concocting sham corporations, phony documents, and false tax returns to secure loans.
What we know: On May 28, 14 defendants were arrested, including residents of the San Fernando Valley and Glendale.
They are charged in two federal criminal complaints with illegally collecting more than $25 million in taxpayer-funded COVID-19 relief monies and federally guaranteed small business loans.
The allegations suggest that four additional defendants reside in Armenia.
The charges include conspiracy to deceive the government, making false claims, wire fraud, bank fraud, money laundering conspiracy, laundering monetary instruments, engaging in monetary transactions resulting from illegal behavior, and structuring financial transactions to avoid reporting requirements.
During the arrests, law enforcement seized around $20,000 in cash, two money-counting machines, currency straps, several cell phones and laptop computers, two loaded semi-automatic 9mm handguns, and crates of 9mm ammunition.
This investigation was carried out by US Immigration and Customs Enforcement, the Department of Homeland Security’s Office of Inspector General, and the El Camino Real Financial Crimes Task Force.
Timeline:
- 2018: Alleged criminal activity orchestrated by Vahe Margaryan, also known as “William McGrayan,” begins.
- April 2021: Sarkis Gareginovich Sarkisyan, also known as “Samuel Shaw,” allegedly submits a false application for over $700,000 in Paycheck Protection Program (PPP) funds for a fake business.
- May 2021: Mery Babayan, also known as “Mery Diamondz,” along with co-defendants Vahe Margaryan and Hovannes Hovannisyan, also known as “John Harvard,” allegedly defraud a bank to obtain an approximately $3 million federally guaranteed loan through the SBA’s Preferred Lending Program.
- January 2023: Felix Parker allegedly makes false statements and submits fraudulent documents to obtain over $2 million in government-guaranteed funds.
- June 2023: Axsel Markaryan, also known as “Axel Mark,” allegedly fraudulently obtains over $5 million in SBA loans.
- November 2023: Axsel Markaryan and co-schemers allegedly launder the fraudulently obtained money, sending at least $100,000 to a co-schemer in Armenia.
- January 2025: Alleged criminal activity orchestrated by Vahe Margaryan concludes.
- May 28: Fourteen defendants are arrested in connection with the fraud scheme.
The backstory: This investigation was conducted by US Immigration and Customs Enforcement, the Department of Homeland Security’s Office of Inspector General, and the El Camino Real Financial Crimes Task Force.
The task force is a multi-agency initiative to combat financial crimes in Southern California.
What they’re saying: John Pasciucco, acting Special Agent in Charge for ICE Homeland Security Investigations Los Angeles, stated, “This transnational criminal network sought to defraud the government of millions of dollars and almost succeeded. Through the diligent work of the El Camino Real Financial Crimes Task Force and our federal partners, ICE HSI is continuing to identify these criminal groups looking to profit from the pandemic and will use all available resources to hold them accountable, to include removing them from the country when applicable.”
United States Attorney Bill Essayli emphasized, “Today’s enforcement action is intended to send a message to all criminals who take advantage of government programs designed to help those who need them most. If you took COVID-19 or SBA money you weren’t entitled to, your door could be the next one we visit. Together with our law enforcement partners, my office will aggressively prosecute individuals who cheat the system meant to protect and support law-abiding citizens.”
Jonathan Huang, acting Special Agent in Charge for the U.S. Small Business Administration Office of Inspector General Western Region, commented, “Scheming to fraudulently obtain federal funds that were meant to provide assistance to the nation’s small businesses is unacceptable. OIG will continue to ardently investigate fraudulently obtained SBA program funds, including COVID-19 pandemic-related loans, to protect taxpayers from fraud, waste, and abuse. I want to thank the U.S. Attorney’s Office and our law enforcement partners for their dedication and pursuit of justice.”
Tyler Hatcher, Special Agent in Charge for IRS Criminal Investigation Los Angeles Field Office, added, “Today, 14 individuals were arrested in connection with a fraudulent loan scheme in which they allegedly obtained in excess of $25 million through the SBA Paycheck Protection Program, Economic Injury Disaster Loan programs, and other federal funding programs. These programs were established to assist individuals and businesses in need of financial assistance and instead were pilfered by the named defendants. IRS-CI is dedicated to identifying and dismantling criminal organizations that prey on assistance programs set up for the benefit of our law-abiding citizens.”
What you can do: Anyone with knowledge of allegations of attempted fraud involving COVID-19 relief funding can report it to the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or through the NCDF Web Complaint Form.
Additionally, suspicious criminal conduct can be reported to the ICE Tip Line at 866-DHS-2-ICE, which is available 24 hours a day, seven days a week.
What’s next: Unless proven guilty, we assume all accused are innocent. If convicted, each defendant faces a statutory maximum of decades in federal prison.