International Law

California Ponzi Fraud

Image by Getty Images via Daylife

From the FBI Press Release on the Luminous Wealth Ponzi fraud.

A Glendale man pleaded guilty this morning to federal fraud charges, admitting that he orchestrated a Ponzi scheme that took in more than $14 million from victim-investors.

Antoine David Haroutunian, 47, admitted that from June 2005 through August 2008, he solicited investor funds through his companies, Luminous Wealth Management and Luminous Management, promising 24 percent annual returns.

Appearing this morning before United States District Judge Percy Anderson in Los Angeles, Haroutunian acknowledged that he used written materials and in-person meetings to solicit potential investors, who were told that Luminous held investments in commercial bridge loans, U.S. government-guaranteed loans, options and real estate investment trusts.

In fact, Haroutunian made almost no investments, instead using victims' money to pay himself and his associates, and to fund his own business ventures.

Haroutunian used the victims' funds to make "interest" payments and to return capital to other victim-investors; to fund cash payments to himself; to fund his other business ventures; and to make payments to his associates in Los Angeles, New York and Armenia.

Haroutunian solicited investors through advertisements placed in the Los Angeles Times and on the internet.

During the course of the Luminous scheme, the California Department of Corporations in September 2006 issued two desist and refrain orders which enjoined Haroutunian "from offering or selling or buying or offering to buy any security in the State of California."

Haroutunian ignored these orders while continuing to operate his investment scam that led to approximately $10 million in losses.

Earlier this month, Haroutunian pleaded guilty in two other criminal cases. In one case, Haroutunian admitted that, in 2003, when he was employed as a customer service representative at Bank of America, he used his account-access privileges to obtain customer account information that he and his associates used to withdraw funds from accounts without authorization.

Haroutunian also admitted that he and his associates made unauthorized transfers from accounts by fraudulently writing checks on the accounts to themselves, their creditors and others.

As a result of the conduct in this case, Bank of America suffered losses of more than $450,000.

In the third case, Haroutunian pleaded guilty earlier this month to tax fraud. By pleading guilty in the tax case, Haroutunian admitted that in 2004 he fraudulently obtained a federal tax refund of $183,345 that was based on fictitious gambling winnings and losses he falsely claimed on his personal tax return.

In relation to the mail fraud he pleaded guilty to today, Haroutunian faces a statutory maximum sentence of 20 years in federal prison.

Judge Anderson is scheduled to sentence him in this case on August 3.

Haroutunian is scheduled to be sentenced on the bank fraud and the tax fraud charges on August 10.

At that time, he faces a statutory maximum sentence of 120 years in the bank fraud case and up to five years in prison on the tax fraud charges.

Full post as published by Misleading Advertising Law on April 03, 2009 (boomark / email).