ICE arrests 14 suspects in SoCal involved in COVID loan fraud scheme

Feds bust massive fraud ring in LA County

Federal officials have arrested 14 people accused of stealing more than $30 million in COVID relief funds and small business loans.

LOS ANGELES - Fourteen individuals were arrested in connection with a vast scheme to fraudulently obtain over $25 million in COVID-19 relief funds and federally-guaranteed small business loans, according to U.S. Immigration and Customs Enforcement.

The alleged criminal network, with some members believed to be in Armenia, involved concocting sham corporations, phony documents, and false tax returns to secure loans.

What we know:

Fourteen defendants, including residents from the San Fernando Valley and Glendale, were arrested on May 28.

They are accused in two federal criminal complaints of fraudulently obtaining more than $25 million in taxpayer-funded COVID-19 relief funds and federally-guaranteed small business loans.

Four additional defendants named in the complaints are believed to be in Armenia.

The charges include conspiracy to defraud the government, false claims, wire fraud, bank fraud, money laundering conspiracy, laundering monetary instruments, engaging in monetary transactions derived from unlawful activity, and/or structuring financial transactions to evade reporting requirements.

During the arrests, law enforcement seized approximately $20,000 in cash, two money-counting machines, currency straps, multiple cell phones and laptops, two loaded semi-automatic 9mm handguns, and boxes of 9mm ammunition.

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 U.S. 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 effort focused on 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 information about allegations of attempted fraud involving COVID-19 relief funds can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or by using the NCDF Web Complaint Form.

Additionally, suspicious criminal activity can be reported to the ICE Tip Line 24 hours a day, seven days a week at 866-DHS-2-ICE.

What's next:

All defendants are presumed innocent until proven guilty. If convicted, each defendant could face a statutory maximum sentence of decades in federal prison.

The Source: Information for this story is from U.S. Immigration and Customs Enforcement's Los Angeles office.

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