Los Angeles, California - Two brothers and their wives have been charged in a federal grand jury indictment alleging a scheme to submit at least 35 fraudulent loan applications seeking more than $5.6 million in COVID-19 relief loans authorized by the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Richard Ayvazyan, 42; Richard’s wife, Marietta Terabelian, 36; Richard’s brother, Artur Ayvazyan, 40; and Artur’s wife, Tamara Dadyan, 39, all of Encino, were charged in 12-count indictment returned late Tuesday by a federal grand jury. The indictment charges all four defendants with one count of conspiracy to commit bank and wire fraud, four counts of bank fraud, and six counts of wire fraud. Richard Ayvazyan was also charged with one count of aggravated identity theft.
According to the indictment, the defendants used fake, stolen or synthetic identities – including the created identities of “Iuliia Zhadko” and “Viktoria Kauichko” – to submit fraudulent applications for loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Relief Program (EIDL) and the Paycheck Protection Program (PPP) under the CARES Act. The defendants also allegedly submitted fraudulent EIDL and PPP loan applications in their own names, using fake or fictitious businesses. In support of the fraudulent loan applications, the defendants often submitted false and fictitious documents to lenders and the SBA, including fake identity documents, tax documents and payroll records, according to the indictment.
Once financial institutions and the SBA approved the fraudulent EIDL and PPP loans, the defendants used the fraudulently obtained loan proceeds for their own personal benefit, including to purchase luxury homes. Among other things, the defendants used disaster relief loans as down payments on a $3.25 million residence in Tarzana and a $1 million home in Glendale. Use of disaster relief loan proceeds for such purposes is expressly prohibited under the PPP and EIDL programs.
The indictment alleges that the four defendants received at least $4.6 million as a result of the fraudulent PPP and EIDL applications.
Enacted in March, the CARES Act is designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April, Congress authorized over $300 billion in additional PPP funding.
The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.
The EIDL program is designed to provide economic relief to small businesses experiencing a temporary loss of revenue. EIDL proceeds can be used to cover a wide array of working capital and normal operating expenses, such as continuation of health care benefits, rent, utilities and fixed debt payments. If an applicant also obtains a loan under the PPP, the EIDL funds cannot be used for the same purpose as the PPP funds.
An indictment is merely an allegation and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Artur Ayvazyan and Dadyan were arrested on November 5 pursuant to a criminal complaint previously filed in this case. They were released on bond and are scheduled to be arraigned on December 3 and 4, respectively.
Richard Ayvazyan and Terabelian were arrested in Miami on October 20 as they returned from a vacation in Turks and Caicos. They were released on bond and returned to Los Angeles, but a court hearing in Los Angeles has not yet been scheduled.
The conspiracy and bank fraud charges alleged in the indictment each carry a statutory maximum sentence of 30 years in federal prison. The wire fraud counts each a statutory maximum sentence of 20 years. The aggravated identity theft charge carries a mandatory consecutive two-year sentence.
This case is part of an ongoing investigation being conducted by the FBI, IRS Criminal Investigation, and the Small Business Administration – Office of Inspector General.
This case is being prosecuted by Assistant U.S. Attorney Julian L. André of the Major Frauds Section and DOJ Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section.
Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form.