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Home Court filings USA v. Ayvazyan et al — Arman Hayrapetyan filings, C.D. Cal. EX PARTE APPLICATION for Protective Order Government's Ex Parte Application for… — USA…

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EX PARTE APPLICATION for Protective Order Government's Ex Parte Application for… — USA v. Ayvazyan et al (Dkt. 219)

Record facts

CourtU.S. District Court for the Central District of California
Filed2021-03-29

U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 219 · 2021-03-29 · Docket on CourtListener

Summary

The government's ex parte application for a modified protective order in USA v. Ayvazyan et al, No. 2:20-cr-00579-SVW, in the U.S. District Court for the Central District of California, filed March 29, 2021 as Doc. 219. It asks the court to replace the protective order entered December 11, 2020 (ECF 92) and to have defense counsel take possession of confidential discovery previously given to defendants. The government alleges that Richard Ayvazyan and Tamara Dadyan used identity information from discovery to commit new crimes, charged in the first superseding indictment as concealment money laundering and attempted bank fraud. It states that the superseding indictment concerns over 150 PPP and EIDL loans, against 35 in the original indictment of November 17, 2020. The 29-page filing carries the /s/ signature of Scott Paetty.

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TRACY L. WILKISON 
Acting United States Attorney 
BRANDON D. FOX 
Assistant United States Attorney 
Chief, Criminal Division 
SCOTT PAETTY (Cal. Bar No. 274719) 
BRIAN FAERSTEIN (Cal. Bar No. 274850) 
Assistant United States Attorneys 
Major Frauds/Environmental and Community Safety Crimes Sections 
1100/1300 United States Courthouse 
312 North Spring Street 
Los Angeles, California 90012 
Telephone: (213) 894-6527/3819 
Facsimile: (213) 894-6269/0141 
E-mail: 
Scott.Paetty@usdoj.gov/Brian.Faerstein@usdoj.gov 
 
DANIEL S. KAHN 
Acting Chief, Fraud Section 
Criminal Division, U.S. Department of Justice 
CHRISTOPHER FENTON 
Trial Attorney, Fraud Section 
Criminal Division, U.S. Department of Justice 
1400 New York Avenue NW, 3rd Floor 
Washington, DC 20530 
Telephone: (202) 320-0539 
Facsimile: (202) 514-0152 
 
E-mail: 
Christopher.Fenton@usdoj.gov 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
UNITED STATES DISTRICT COURT 
 
FOR THE CENTRAL DISTRICT OF CALIFORNIA 
 
UNITED STATES OF AMERICA, 
Plaintiff, 
v. 
RICHARD AYVAZYAN, 
aka “Richard Avazian” and 
    “Iuliia Zhadko,” 
MARIETTA TERABELIAN, 
  aka “Marietta Abelian” and     
      “Viktoria Kauichko,” 
ARTUR AYVAZYAN, 
aka “Arthur Ayvazyan,” and 
TAMARA DADYAN, 
MANUK GRIGORYAN, 
  aka “Mike Grigoryan,” and 
      “Anton Kudiumov,” 
ARMAN HAYRAPETYAN, 
EDVARD PARONYAN, 
No. CR 20-579(A)-SVW 
GOVERNMENT’S EX PARTE APPLICATION 
FOR MODIFIED PROTECTIVE ORDER; 
MEMORANDUM OF POINTS AND 
AUTHORITIES; DECLARATION OF BRIAN 
FAERSTEIN; EXHIBITS 
[PROPOSED] MODIFIED PROTECTIVE 
ORDER FILED CONCURRENTLY HEREWITH 
[PROPOSED] ORDER REGARDING CLAW-
BACK OF CONFIDENTIAL DISCOVERY 
FROM DEFENDANTS FILED CONCURRENTLY 
HEREWITH 
 
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aka “Edvard Paronian” and 
    “Edward Paronyan,” and 
VAHE DADYAN, 
 
Defendants. 
 
Plaintiff United States of America, by and through its counsel 
of record, the Acting United States Attorney for the Central District 
of California and Assistant United States Attorneys Scott Paetty and 
Brian Faerstein, and United States Department of Justice Trial 
Attorney Christopher Fenton, hereby applies ex parte for entry of a 
modified protective order pursuant to Federal Rule of Criminal 
Procedure 16(d)(1), replacing the protective order entered by the 
Court on December 11, 2020 (ECF 92). 
This ex parte application is based upon the attached memorandum 
of points and authorities, the Declaration of Brian Faerstein and  
attached exhibits, the files and records in this case, and such 
further evidence and argument as the Court may permit. 
The government submits this application on an ex parte basis due 
to the extraordinary nature of defendants R. Ayvazyan’s and T. 
Dadyan’s abuse of discovery and violations of the existing protective 
order in this case to commit new crimes, as described further herein 
and alleged in the first superseding indictment.  The government has 
recently produced a significant amount of confidential information to 
both the original defendants and newly-charged defendants in this 
case and submits there is an urgent need to protect the vast amount  
// 
// 
 
 
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of PII and other sensitive third-party, witness, and victim 
information from being misused for additional criminal purposes. 
Dated: March 29, 2021 
Respectfully submitted, 
 
TRACY L. WILKISON 
Acting United States Attorney 
 
BRANDON D. FOX 
Assistant United States Attorney 
Chief, Criminal Division 
 
 
      /s/ 
 
SCOTT PAETTY 
BRIAN FAERSTEIN 
Assistant United States Attorneys 
CHRISTOPHER FENTON 
Department of Justice Trial Attorney 
 
Attorneys for Plaintiff 
UNITED STATES OF AMERICA 
 
 
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TABLE OF CONTENTS 
DESCRIPTION 
PAGE 
 
 
I. 
INTRODUCTION...................................................1 
II. 
STATEMENT OF FACTS.............................................2 
A. 
Indictment Filed November 17, 2020........................2 
B. 
Meet-and-Confers Regarding Protective Order...............3 
C. 
Litigation Regarding Protective Order.....................6 
D. 
Protective Order Entered December 11, 2020................8 
E. 
Defendants’ Commission of Additional Crimes in 
December 2020 Through February 2021 Using Discovery.......9 
F. 
First Superseding Indictment Filed March 9, 2021.........13 
III. ARGUMENT......................................................13 
A. 
Defendants’ Violations of the Court’s Orders and 
Commission of New Crimes Constitute Good Cause for 
Modifying the Protective Order and Implementing 
Standard Safeguards......................................16 
B. 
Defendants’ Violations of the Court’s Orders and 
Commission of New Crimes Constitute Good Cause to 
Enter an Order Clawing Back Confidential Discovery 
Materials from the Defendants............................20 
C. 
The Proposed Modified Protective Order Will Not Unduly 
Prejudice Defendants.....................................20 
D. 
The Terms of the Proposed Modified Protective Order 
are Reasonable and Narrowly Tailored to Address the 
Demonstrated Risks of Specific Injury....................22 
E. 
An Ex Parte Order Is Appropriate and Necessary to 
Limit the Opportunities for Defendants to Commit New 
Crimes While on Pretrial Release and Cause Further 
Harm.....................................................23 
IV. 
CONCLUSION....................................................24 
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TABLE OF AUTHORITIES 
DESCRIPTION 
 
 
 
 
 
 
 
 
 
 
PAGE 
Cases 
Alderman v. United States, 
394 U.S. 165 (1969) .............................................. 14 
 
Anderson v. Cryovac, Inc., 
805 F.3d 1 (1st Cir. 1986) ....................................... 14 
 
Cipollone v. Liggett Group, Inc., 
785 F.2d 1108 (3d Cir. 1986) ..................................... 15 
 
United States v. Concord Mgmt. & Consulting LLC, 
404 F. Supp. 3d 67 (D.D.C. 2019) ............................. 15, 22 
 
United States v. Johnson, 
191 F. Supp. 3d 363 (E.D. Pa. 2016) .......................... 15, 22 
 
United States v. Luchko,  
 No. CRIM.A. 06-319, 2007 WL 1651139 (E.D. Pa. June 6, 2007) ...... 15 
 
United States v. Ohiri, 
No. CR 19-0042-SVW, (C.D. Cal. Mar. 14, 2019) ................ 15, 22 
 
United States v. Smith, 
985 F. Supp. 2d 506 (S.D.N.Y. 2013) .......................... passim 
 
United States v. Torres, 
No. 20-cr-00418, 2020 WL 4500046 (D.N.J. Aug. 5, 2020) ....... 18, 19 
 
United States v. Wecht, 
484 F.3d 194 (3d Cir. 2007) .................................. 14, 16 
 
United States v. Workman, 
No. 1:18-CR-00020, 2019 WL 276843 (W.D. Va. Jan. 22, 2019) ... 15, 22 
Statutes, Rules, and Other Authority 
18 U.S.C. § 3771................................................... 18 
Fed. R. Crim. P. 16(d)......................................... passim 
2 Fed. Prac. & Proc. Crim. § 262................................... 14 
 
 
 
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I. 
INTRODUCTION 
Two of the defendants in this case -- Richard Ayvazyan (“R. 
Ayvazyan”) and Tamara Dadyan (“T. Dadyan”) -- have already violated 
the Court’s existing protective order, violated their conditions of 
pretrial release, and been indicted for new crimes, namely money 
laundering and attempted bank fraud.  These new crimes involved the 
use of information relating to two of the dozens of fake, stolen, and 
synthetic identities available to defendants through the discovery 
materials the government produced to their respective counsel.  The 
government requests that the Court intervene and modify the operative 
protective order to mitigate the specific risk that defendants cause 
further injury by using discovery to commit more crimes. 
At the outset of this case, the government sought an order that 
would have implemented standard safeguards for the handling of 
confidential discovery containing volumes of personally identifiable 
information (“PII”) belonging to victims and other third-parties.  
The standard safeguards would have required defendants to review such 
confidential information under the supervision of their respective 
counsel.  Defendant R. Ayvazyan, joined by defendant T. Dadyan and 
the other two original defendants in this case (Marietta Terabelian 
and Artur Ayvazyan, or “A. Ayvazyan”), objected to any restriction 
that would limit their direct possession of discovery materials, 
including, for example, fraudulent driver’s licenses and Social 
Security cards for their aliases.  
Within days of the government’s production of discovery, 
defendant R. Ayvazyan used identification information for one of the 
fake identities to set up online brokerage and cryptocurrency 
accounts and launder hundreds of thousands of dollars of stolen 
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COVID-19 disaster relief money.  Defendant T. Dadyan followed shortly 
thereafter, using the stolen identification information of a victim 
to attempt to impersonate that victim and access stolen COVID-19 
disaster relief funds that had been frozen by a bank. 
The recently unsealed first superseding indictment charges 
defendants R. Ayvazyan (five counts of concealment money laundering) 
and T. Dadyan (attempted bank fraud) with these additional crimes.  
However, defendants continue to possess the vast amount of 
confidential discovery materials in this case.  Defendants R. 
Ayvazyan’s and T. Dadyan’s violations of the existing protective 
order demonstrate the risk of specific injury that remains unchecked 
under the existing protective order and provide the Court with a 
compelling basis to implement standard discovery safeguards at this 
stage of the proceeding.  The need to do so is urgent given that 
dozens of fake, stolen, and synthetic identities and dozens of fake 
and stolen business names remain available to defendants to use to 
engage in further criminal activities.  As the government continues 
its investigation, the potential for additional criminal conduct is 
substantial, as reflected by the massive scope of the alleged 
conspiracy already charged in this case and the fact that a large 
amount of the criminal proceeds has yet to be traced.  
II. 
STATEMENT OF FACTS 
A. 
Indictment Filed November 17, 2020  
On November 17, 2020, a grand jury indicted defendants R. 
Ayvazyan, Terabelian, A. Ayvazyan, and T. Dadyan with conspiracy to 
commit bank fraud and wire fraud as well as individual counts of bank 
fraud, wire fraud, and aggravated identity theft (the latter charge 
then against defendant R. Ayvazyan only).  (ECF 32.)  The charges 
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arose out of defendants’ scheme to fraudulently obtain millions of 
dollars in COVID-19 disaster relief funds under the Paycheck 
Protection Program (“PPP”) and Economic Injury Disaster Loan Program 
(“EIDL”).  (Id.)   
The indictment, which has since been superseded as described 
further below, alleged that the defendants used fake, stolen, and 
synthetic identities and fake and stolen business names to submit 
fraudulent loan applications, using their ill-gotten gains to 
purchase luxury residential properties and other high-end goods.  
(Id.)  In furtherance of the scheme, defendants made false statements 
and submitted fraudulent documents, including fake Internal Revenue 
Service (“IRS”) forms and fake or stolen California drivers’ 
licenses.  (Id.)  The indictment further alleged that the defendants 
controlled numerous bank accounts, in many cases using fake or stolen 
identities to establish and move fraudulent loan proceeds between 
those accounts.  (Id.)   
B. 
Meet-and-Confers Regarding Protective Order  
Prior to defendants’ arraignment, on November 30, 2020, the 
government provided counsel for the original defendants with a 
proposed protective order that would govern the production and 
handling of discovery containing PII and Privacy Act information in 
this case.  (See ECF 65, Declaration of Julian L. André (“André 
Decl.”), ¶ 14; see also ECF 63, Ex. C.)  The proposed protective 
order was based on the standard protective order adopted by the U.S. 
Attorney’s Office in March 2020 after consultations with the Office 
of the Federal Public Defender.  (See id.)   
The government informed counsel that it required the entry of a 
protective order prior to producing copies of discovery in large part 
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due to particularized concerns about the content of the discovery and 
the nature of the charges in this case, in addition to concerns about 
defendant R. Ayvazyan’s and Terabelian’s prior fraud convictions in 
this District.  See United States v. Ayvazyan et al., No. SA CR 11-
180-CJC, Dkt. Nos. 55, 58, 90, 99.1 
Specifically, the government detailed that the discovery 
contained significant amounts of sensitive and confidential 
information, including: 
• PII belonging to real persons, including victims and other 
third-parties, among others (ECF 65, André Decl., ¶ 11.a.); 
• unauthorized and counterfeit access devices relating to 
fake, stolen, and synthetic identities (id., ¶ 11.b.); 
• financial records, including bank records, credit card 
records, and loan applications containing PII relating to 
real and synthetic identities (id., ¶ 11.c.); 
• telephone and Internet service provider records containing 
third-party PII (id., ¶ 11.d.); 
• credit reports relating to real persons (Id., ¶ 11.e.); 
• records and information obtained from government agencies, 
including the IRS and California Employment Development 
Department (id., ¶ 11.f.); and  
 
1 Defendants R. Ayvazyan and Terabelian were convicted of 
conspiracy to commit bank fraud in 2012.  In the factual basis to his 
plea agreement, defendant R. Ayvazyan admitted that he defrauded 
three financial institutions by submitting fraudulent loan 
applications and false supporting documentation.  United States v. 
Ayvazyan et al., No. SA CR 11-180-CJC, Dkt. No. 58.  Defendant R. 
Ayvazyan also admitted that, in connection with a short sale of his 
residence to his mother, he caused his mother to submit a fraudulent 
letter to a financial institution falsely stating she was not related 
to the owner of the property.  Id. 
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• physical evidence and digital devices seized pursuant to 
search warrants that the government understood contained 
significant amounts of third-party PII.  (Id., ¶ 12.) 
The government explained that the PII and other sensitive information 
contained in the discovery included names, dates of birth, addresses, 
phone numbers, email addresses, Social Security numbers, drivers’ 
license numbers, bank account numbers, credit card numbers, other 
bank and credit card account information, tax information, mobile 
identification numbers, and personal online passwords.  (See 
generally id., ¶¶ 11-12.) 
The government informed the defense that it could not produce 
such discovery without meaningful safeguards in place.  (See ECF 63-
6, Ex. E; ECF 65, André Decl., ¶ 2.)  Such protections necessarily 
included restrictions on defendants’ possession, outside of defense 
counsels’ presence, of PII relating to third-parties or witnesses, or 
materials reflecting unauthorized and counterfeit access devices -- 
the possession of which could be used to commit new crimes.  (Id.)  
Counsel for defendant R. Ayvazyan advised the government that it 
objected to the government’s proposed protective order, including any 
provisions that would preclude defendant R. Ayvazyan from possessing 
discovery in this case.  (ECF 65, André Decl., ¶ 15.)   
Counsel for defendant R. Ayvazyan pointed to the purported 
“illogic” of the government’s concerns about discovery abuse, 
stating, “under the government’s own charging theory, [defendant R. 
Ayvazyan] and his alleged co-conspirators would also be the 
‘legitimate owners’ of information in loan applications, most of 
which were submitted by Iuliia Zhadko and Viktoria Kauichko, who the 
government alleges to be [defendant R. Ayvazyan] and his wife.  It 
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would be illogical to insist on protection of Zhadko’s and Kauichko’s 
information to the detriment of [defendant R. Ayvazyan’s] defense -- 
especially when the government contends that these individuals do not 
exist.”  (ECF 63-5, Ex. D at 1 (citation omitted).)  Putting aside 
the fallacy that the defendants could ever be “legitimate owners” of 
fake, stolen, or synthetic identities, defense counsel’s lack of 
concern about adequate protections for information pertaining to the 
fake alias “Iuliia Zhadko” proved short-sighted.  As explained 
further below and alleged in the first superseding indictment, as 
soon as he received discovery, defendant R. Ayvazyan used information 
relating to “Iuliia Zhadko” to launder the fraudulent proceeds of 
COVID-19 disaster relief loans. 
On December 2, 2020, the government and counsel for defendant R. 
Ayvazyan met and conferred regarding the government’s proposed 
protective order, but were unable to reach an agreement as to the 
terms of the protective order.2  (Id.) 
C. 
Litigation Regarding Protective Order  
On December 7, 2020, the government and defendant R. Ayvazyan 
filed separate ex parte applications seeking relief, which each party 
opposed.  (See ECF 63, 65, 73, 74.)   
The government’s ex parte application sought the Court’s entry 
of a protective order substantially identical to the proposed order 
the government previously provided to the defense (with the exception 
 
2 On November 30, 2020, counsel for defendant Terabelian 
initially signed the government’s stipulation for protective order, 
representing that he had conferred with his client regarding the 
proposed order and agreed to its terms.  (ECF 50 at 8.)  However, 
several days later, counsel for defendant Terabelian filed a notice 
indicating he was withdrawing the stipulation because he mistakenly 
thought the agreed-upon protective order was a different version 
apparently circulated by counsel to defendant R. Ayvazyan.  (ECF 52.) 
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of an additional provision permitting the defendants to review 
discovery over video-conferencing technology, accommodating a concern 
raised by the defense).  (ECF 65; ECF 65-1.)  In support of its 
application, the government summarized the serious potential for the 
misuse of discovery under the specific circumstances of this case: 
“if given unfettered access to this sensitive information, the 
defendants may use these fake, stolen, and synthetic identities to 
commit new crimes, such as obtaining new credit cards, applying for 
new loans or other lines of credits, and opening new bank accounts to 
launder criminal proceeds.”  (ECF 73 at 7.)3 
In his ex parte application, filed the same day, defendant R. 
Ayvazyan alternatively proposed the entry of a protective order with 
few restrictions that, as explained further below, would prove to be 
fatally inadequate in this case.  (See ECF 63-2, Ex. A.)  Defendant 
R. Ayvazyan challenged the government’s purported “vague, speculative 
averments of risk unsupported by particular threats,” contending the 
“the government cannot and will not be able to satisfy its heavy 
burden that a specific prejudice or harm will occur in the absence of 
a protective order.”  (ECF 63 at 9-10.)  Counsel for defendant R. 
Ayvazyan also vouched for their client, representing that defendant 
“Ayvazyan has demonstrated that he can follow rules similar to the 
ones that adhere to discovery.”  (ECF 63 at 10.)  Counsel further 
assured the Court by proffering their own ability to monitor and 
ensure their client would not misuse the discovery in this case. 
 
3 In the interest of focusing the Court’s attention on the new 
information regarding defendants’ abuses of discovery, the government 
does not repeat all of its arguments in its initial ex parte 
application or its opposition to defendant R. Ayvazyan’s ex parte 
application.  The government hereby incorporates by reference the 
information and arguments in those filings.  (ECF 65, 73.) 
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Counsel represented that defendant Ayvazyan “would be reviewing 
discovery through Steptoe’s eDiscovery system, which will track every 
document he views.  It would be fundamentally illogical for Ayvazyan 
to misuse data or information when he knows that there will be an 
easily collectible record of his access.”  (ECF 74 at 3.) 
D. 
Protective Order Entered December 11, 2020 
On Friday, December 11, 2020, the Court entered the protective 
order proposed by defendant R. Ayvazyan.  (ECF 92.)  The protective 
order permitted defendants’ direct “[a]ccess to and possession of the 
unredacted discovery materials” in this case.  (Id., ¶ 3.)  Other 
than requiring redaction of discovery materials that the defense 
provided to any third party “for the purpose of preparing their 
defense,” the protective order contained only one condition 
restricting defendants’ use of the sensitive information that would 
be directly in their possession:  “Use of the unredacted discovery 
materials is limited to the preparation of the defense and litigation 
of this case only.”  (Id., ¶ 4.) 
On Monday, December 14, 2020, pursuant to the Court’s entry of 
the protective order, the government made its first production of 
copies of discovery to counsel for the original defendants.4  (See 
Declaration of Brian Faerstein (“Faerstein Decl.”), ¶¶ 2-3, Ex. 1.)  
Within days, defendant R. Ayvazyan began using the discovery to 
commit new crimes -- in violation of the protective order’s one 
limitation that the discovery be used for “the preparation of the 
 
4 The government made a small number of redactions relating to 
loans that were not the subject of the indictment but were the 
subject of the government’s ongoing investigation.  The government 
did not redact PII. 
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defense and litigation of this case only” and in violation of the 
conditions of his pretrial release.  (ECF 92, ¶ 4.) 
At the same time defendant R. Ayvazyan was abusing his access to 
unfettered discovery in this case to commit more crimes (described 
below), his counsel was preparing and publishing an article in the 
Daily Journal that portrayed themselves as “savvy defense attorneys” 
who had done “battle” with prosecutors over “unnecessarily 
restrictive [protective] orders.”  Counsel offered “practice 
pointers” to the rest of the criminal defense bar based on what 
counsel characterized as their personal “success” in litigating the 
issue before this Court.  See “Advocating against ‘one-size-fits-all’ 
protective orders during the COVID-19 pandemic,” Daily Journal, 
January 6, 2021, available at: https://www.dailyjournal.com/mcle/865-
advocating-against-one-size-fits-all-protective-orders-during-the-
covid-19-pandemic (last viewed March 29, 2021).   
E. 
Defendants’ Commission of Additional Crimes in December 
2020 Through February 2021 Using Discovery 
As alleged in the original indictment, defendant R. Ayvazyan 
applied for loans using his fake alias -- “Iuliia Zhadko” -- and 
deposited the fraudulently obtained proceeds in bank accounts he 
opened using his alias’s name.  (ECF 32 ¶¶ 1, 16.c, 23 (Overt Acts 
Nos. 12, 27-29, 33).)  Between October 20 and November 5, 2020, law 
enforcement arrested defendants R. Ayvazyan, Terabelian, A. Ayvazyan, 
and T. Dadyan, searched their residences, and seized evidence 
relating to their criminal activities.  (See Faerstein Decl., ¶ 1.)  
After law enforcement seized the evidence, the activity in the 
“Iuliia Zhadko” bank accounts stopped.  (See, e.g., id., ¶ 7, Ex. 3.) 
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sole signatory to the newly-opened online brokerage and 
cryptocurrency accounts, as well as to another bank account in his 
alias’s name. (ECF 154, ¶ 58; see also Faerstein Decl., ¶ 7, Ex. 3.)   
Defendant T. Dadyan similarly used information seized during the 
residential search warrant executions but once again made accessible 
through discovery in this case to commit additional crimes.   
In particular, on December 17, 2020, the government made 
available evidence seized pursuant to premises search warrants to 
counsel for the original four defendants so that counsel could 
inspect and copy the evidence, which counsel did.  (See Faerstein 
Decl., ¶ 4.)  The evidence inspected by counsel included dozens of 
fake and stolen identification documents, including fake and stolen 
driver’s licenses, Social Security cards, and credit cards seized 
from defendants A. Ayvazyan’s and T. Dadyan’s residence.  (See id., 
¶¶ 4-5, Ex. 2.)  One of the fake driver’s licenses was in the name of 
A.D., which is a name defendants A. Ayvazyan and T. Dadyan used to 
fraudulently obtain COVID-19 disaster relief funds.  (See id.; see 
also ECF 154, ¶¶ 24.c, 33 (Overt Act Nos. 62-64), 48-49, 60-64.)  The 
stolen money had been deposited in a bank account defendants A. 
Ayvazyan and T. Dadyan fraudulently opened at a financial institution 
(referred to as “Bank 8” in the first superseding indictment) using 
A.D.’s name.  (ECF 154, ¶¶ 60-64.)  Defendants A. Ayvazyan and T. 
Dadyan also used that account to receive other fraudulently obtained 
COVID-19 disaster relief funds.  (Id.) 
After the government made the dozens of fake and stolen 
identification documents available to counsel for inspection and 
copying, defendant T. Dadyan used this identification information to 
commit a new crime.  For example, on or around January 22, 2021, Bank 
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8 froze the account, which at that time contained over $300,000 in 
criminal proceeds.  (Id.)  In an effort to defraud the bank and 
fraudulently obtain the funds, defendant T. Dadyan repeatedly 
telephoned the bank, falsely claiming she was A.D. and that the 
stolen money belonged to her.  (Id.)   
F. 
First Superseding Indictment Filed March 9, 2021 
On March 9, 2021, a grand jury returned a first superseding 
indictment that significantly expands the charges in this case.  The 
new charges include five counts of concealment money laundering 
against defendant R. Ayvazyan relating to the above-described crimes 
involving the use of the alias “Iuliia Zhadko” that he committed 
while on pretrial release.  (ECF 154, ¶¶ 58-59.)  The first 
superseding indictment also charges defendant T. Dadyan with one 
count of attempted bank fraud for the conduct described above 
involving the use of A.D.’s identity, which she also committed while 
on pretrial release.  (Id., ¶¶ 60-64.)   
In addition, the first superseding indictment substantially 
expanded the scope of the charged conspiracy from at least 35 
fraudulent loan applications to over 150 seeking over $21.9 million 
in COVID-19 disaster relief funds.  (Id., ¶ 32.)  The first 
superseding indictment also adds four new defendants, charges all 
defendants with conspiracy to commit money laundering, and includes 
aggravated identity theft counts against all of the original four 
defendants and two of the new defendants.  (See generally id.)   
III. ARGUMENT 
“[T]he trial court can and should, where appropriate, place a 
defendant and his counsel under enforceable orders against 
unwarranted disclosure of the materials which they may be entitled to 
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inspect.”  Alderman v. United States, 394 U.S. 165, 185 (1969).  
Federal Rule of Criminal Procedure 16(d) provides the Court the 
mechanism to enter “protective and modifying orders” in carrying out 
this role:  “At any time the court may, for good cause, deny, 
restrict, or defer discovery or inspection, or grant other 
appropriate relief.”  Fed. R. Crim. P. 16(d)(1).  The Court maintains 
“ample power” and “vast” discretion in fashioning relief under Rule 
16(d)(1) upon a showing of good cause.  See Federal Practice and 
Procedure (Wright & Miller), 2 Fed. Prac. & Proc. Crim. § 262 (4th 
ed.), Oct. 2020; see also Fed. R. Crim. P. 16, Adv. Comm. Notes, 1966 
Amend. (“Control of the abuses of discovery is necessary if it is to 
be expanded in the fashion proposed in” amendments broadening “the 
scope of pretrial discovery” under Rule 16). 
While the Ninth Circuit Court of Appeals has not spoken directly 
to what constitutes “good cause” under Rule 16(d)(1), courts 
generally find good cause “is established on a showing that 
disclosure will work a clearly defined and serious injury to the 
party seeking closure.”  United States v. Wecht, 484 F.3d 194, 211 
(3d Cir. 2007).  That is, a “finding of harm ‘must be based on a 
particular factual demonstration of potential harm, not on conclusory 
statements.’”  United States v. Smith, 985 F. Supp. 2d 506, 523 
(S.D.N.Y. 2013) (quoting Anderson v. Cryovac, Inc., 805 F.3d 1, 8 
(1st Cir. 1986)) (citation omitted).  In addition, courts must 
“balance several interests, including whether dissemination of the 
discovery materials inflicts hazards to others, and whether the 
imposition of the protective order would prejudice the defendant.”  
Smith, 985 F. Supp. 2d at 523 (citations and internal quotation marks 
omitted). 
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Protective orders governing large amounts of discovery 
containing sensitive information are appropriate upon a showing of 
good cause.  See, e.g., United States v. Concord Mgmt. & Consulting 
LLC, 404 F. Supp. 3d 67, 74 (D.D.C. 2019) (“district courts have 
issued ‘umbrella’ protective orders to manage large amount[s] of 
sensitive information”) (citation omitted); Smith, 985 F. Supp. 2d at 
546 (finding it “consistent with the proper allocation of evidentiary 
burdens for the [C]ourt to construct a broad ‘umbrella’ protective 
order upon a threshold showing by [the Government] of good cause”) 
(quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108, 1122 (3d 
Cir. 1986)); United States v. Luchko, No. CRIM.A. 06-319, 2007 WL 
1651139, at *11 (E.D. Pa. June 6, 2007) (“Given the large-scale 
nature of the discovery involved in this case and the attendant 
monumental burden on the government involved in reviewing and making 
redaction decisions with respect to all of these documents, an 
umbrella protective order is appropriate.”).   
Moreover, “[c]ourts regularly require sensitive discovery to be 
viewed in a particular location in the presence of counsel, and only 
after viewers agree (by signing a memorandum of understanding) not to 
misuse the discovery.”  Concord Mgmt., 404 F. Supp. 3d at 77 
(collecting cases); see also, e.g., United States v. Johnson, 191 F. 
Supp. 3d 363, 374 (E.D. Pa. 2016) (“[R]equiring the Defendants to 
review the protected documents in the presence of counsel in no way 
impairs the effectiveness of their proffered defenses.”); United 
States v. Workman, No. 1:18-CR-00020, 2019 WL 276843, at *2 (W.D. Va. 
Jan. 22, 2019) (finding good cause for protective order restricting 
defendant’s access to discovery only in counsel’s presence where, 
among other things, indictment provided “probable cause to believe 
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[defendant] intimidated a confidential informant and altered or 
destroyed records, making it appropriate to limit his unsupervised 
access to discovery materials”).  
A. 
Defendants’ Violations of the Court’s Orders and Commission 
of New Crimes Constitute Good Cause for Modifying the 
Protective Order and Implementing Standard Safeguards 
At this stage of the case, good cause for the government’s 
proposed modified protective order is evident based on defendants’ 
abuse of the discovery process and breach of the Court’s trust. 
Following the government’s production of discovery, defendants 
R. Ayvazyan and T. Dadyan used that information to continue their 
criminal scheme.  There is nothing stopping them or the other 
defendants in this case -- some of whom are family members and all of 
whom are charged in the same criminal scheme rooted in the misuse of 
fake, stolen, and synthetic identities -- from continuing to do the 
same.  Indeed, the government continues to investigate other 
allegations of misuse of discovery to commit new crimes.   
These are not “conclusory statements;” the grand jury’s findings 
of probable cause of defendants R. Ayvazyan’s and T. Dadyan’s post-
indictment and post-discovery money laundering and attempted bank 
fraud offenses concretely support a “particular factual demonstration 
of potential harm,” as well as proof of actual harm already done.  
Smith, 985 F. Supp. 2d at 523.  There can be no more “clearly defined 
and serious injury,” Wecht, 484 F.3d at 211, than the misuse of 
sensitive discovery materials as a sword to commit additional crimes 
instead of as a shield to defend oneself against allegations of 
crimes already committed.  Defendants R. Ayvazyan’s and T. Dadyan’s 
violations of the existing protective order -- not to mention their 
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violations of pretrial bail conditions7 -- provide more than 
sufficient good cause for the Court to exercise its broad discretion 
under Rule 16(d)(1).  Indeed, one of the core principles underlying 
the Court’s critical role under Rule 16(d)(1) is to “control . . . 
abuses of discovery” in consideration of the potential expansive 
nature of discovery under Rule 16.  Fed. R. Crim. P. 16, Adv. Comm. 
Notes, 1966 Amend.  Defendants’ use of discovery information to 
commit new crimes and enrich themselves further using the stolen 
money that is the subject of the indictments qualifies as one such 
blatant abuse of discovery. 
The other previously identified rationales that the government 
proffered in support of its proposed protective order are similarly 
compelling in light of defendants’ discovery abuses.  The discovery 
contains extensive PII and sensitive information relating to victims 
and other third-parties.  The original defendants continue to possess 
these unredacted materials, including discovery relating to more than 
one hundred additional loans charged in the first superseding 
indictment.  And the newly-charged defendants will soon, if they have 
not yet received them from defense counsel, possess these discovery 
materials as well.  (See Faerstein Decl., ¶ 6.)  All defendants are 
alleged to have conspired and worked together in a sweeping 
fraudulent scheme to use fake, stolen, and synthetic identities in 
 
7 In addition to the standard condition that both defendants not 
commit any federal, state, or local crimes, defendant Ayvazyan’s 
conditions of pretrial release include, among other things, that he 
not use or access any bank accounts where he is not a signatory in 
his legal name.  (ECF 47-48.)  Defendant T. Dadyan similarly is 
prohibited from “us[ing] or possess[ing] any identification, mail 
matter, access device, or any identification-related material other 
than in [her] own legal or true name without prior permission from 
[Pretrial Services],” including not using a bank account that is not 
in her true name.  (ECF 20.) 
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submitting over 150 fraudulent loan applications and laundering the 
proceeds they reaped from their fraud.  (See generally ECF 154.)  At 
least two of the defendants have made clear the filing of criminal 
charges has not deterred their continuation of the fraud and use of 
the underlying discovery for criminal purposes.   
On this record, the government’s proposed modified protective 
order is necessary to preserve the security and protect against the 
misuse of the PII and sensitive information of victims and other 
third-parties.  The need to safeguard the privacy interests of 
victims, consistent with the Crime Victims’ Rights Act (“CVRA”), 18 
U.S.C. § 3771, itself is sufficient good cause supporting the Court’s 
entry of a protective order as to confidential victim information.  
The CVRA “provides victims of crime with a collection of rights 
including the ‘right to be reasonably protected from the accused’ and 
the ‘right to be treated with fairness and with respect for the 
victim's dignity and privacy.’  Courts around the country have relied 
on the CVRA to find good cause for entry of protective orders.”  
United States v. Torres, No. 20-cr-00418, 2020 WL 4500046, at *4 
(D.N.J. Aug. 5, 2020) (collecting cases). 
As for the scope of the proposed modified protective order, the 
order should apply to all discovery designated as confidential under 
the terms of the order and apply to all eight defendants.  The first 
superseding indictment charges only defendants R. Ayvazyan and T. 
Dadyan with criminal conduct following the production of discovery in 
this case.  However, their spouses (defendant Terabelian and 
defendant A. Ayvazyan, respectively) also are charged as defendants, 
as is at least one other believed-to-be relative of T. Dadyan 
(defendant Vahe Dadyan).  Moreover, the other newly-charged 
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defendants (defendants Manuk Grigoryan, Arman Hayrapetyan, and Edvard 
Paronyan) all are alleged to have participated in the same close-knit 
bank and wire fraud and money laundering conspiracies in this case, 
including the transfer of fraudulent loan proceeds between bank 
accounts controlled by the defendants and for the benefit of each 
other.  (See generally ECF 154.)   
Other common threads in the manner and means of the conspiracy 
raise similar acute concerns about several of the newly-charged 
defendants having direct possession of the sensitive information in 
the discovery.  For instance, similar to defendant R. Ayvazyan’s use 
of the fake alias “Iuliia Zhadko” to submit fraudulent loan 
applications and set up bank accounts to control the fraudulent loan 
proceeds, defendant Grigoryan used the alias “Anton Kudiumov” to 
apply for fraudulent loans and set up a bank account for laundering 
the proceeds.  (See, e.g., ECF 154, ¶¶ 26.c, 31, 33 (Overt Act Nos. 
45-46, 48-49), 46-47.)  And similar to the aggravated identity theft 
charges against the four original defendants and defendant Grigoryan, 
defendant Hayrapetyan is alleged to have stolen at least two 
different real victims’ personal and business identities to set up 
fraudulent bank accounts in their businesses’ names and submit 
fraudulent loan applications in their personal names.  (See, e.g., 
id., ¶¶ 27.a, 27.b, 27.c, 31, 33 (Overt Act Nos. 1-7), 50-51.) 
In sum, good cause exists for the Court to enter the 
government’s proposed modified protective order.  The proposed order 
will prevent defendants from directly possessing any confidential 
discovery materials, without supervision of counsel, to use for their 
own criminal devices.  The modified protective order also will 
preserve the privacy and security of the significant amounts of PII 
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and other sensitive information of third-parties, including victims, 
while still allowing defendants access to the materials through their 
counsel in preparation of their defense as discussed below. 
B. 
Defendants’ Violations of the Court’s Orders and Commission 
of New Crimes Constitute Good Cause to Enter an Order 
Clawing Back Confidential Discovery Materials from the 
Defendants 
The government also asks the Court to enter an order under Rule 
16(d)(1) requiring counsel for the defendants to take possession of 
any and all confidential discovery materials they previously provided 
to their respective clients.  In balancing the relative interests, 
continuing to allow defendants unsupervised access to discovery 
materials presents a demonstrable threat of “inflict[ing] hazards to 
others.”  Smith, 985 F. Supp. 2d at 523.  At least two of the 
original defendants have shown how the discovery materials can be 
used to commit new crimes using the names “Iuliia Zhadko” and A.D.  
And dozens of additional fake, stolen, and synthetic identities 
remain accessible to defendants to use to engage in further criminal 
activity, as well as dozens of fake and stolen business names.  Good 
cause thus exists to enter an order clawing back all confidential 
discovery materials from the defendants. 
C. 
The Proposed Modified Protective Order Will Not Unduly 
Prejudice Defendants 
The proposed modified protective order will not unduly prejudice 
the defense in preparation for trial in this case.  Defendants will 
continue to have the opportunity to review discovery, either from 
home through any number of video-teleconferencing platforms (e.g., 
Zoom, WebEx, Microsoft Teams, Blue Jeans), or in their respective 
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counsel’s offices.8  Entry of the proposed modified protective order 
will not delay such review in any respect.  Moreover, defendants will 
continue to have the opportunity to review a copy of the discovery 
materials that has not been redacted to remove PII, which will make 
preparation for trial easier than if the government were to produce a 
copy that was redacted to remove PII (which is voluminous in this 
case).  Defendants therefore will be able to continue to participate 
fully in all aspects of their defense.   
In any event, in light of recent developments, the balancing of 
interests has shifted drastically.  At this stage, any argument that 
the proposed modified protective order would unfairly inconvenience 
defendants such that they could not adequately prepare for trial 
should be met with skepticism.  The original four defendants never 
articulated a specific reason as to why it would be unfair to them if 
they were not permitted to physically possess a copy of discovery 
that included fake and stolen driver’s licenses, Social Security 
cards, credit cards, bank account numbers and login credentials, and 
other highly sensitive materials that can be used to commit further 
crimes.  And, in hindsight, defendants’ protestations appear to have 
been pretext.  Defendants’ violation of the Court’s orders and breach 
of trust in this case necessitate more effective safeguards, 
 
8 Only one of the eight defendants -- Arman Hayrapetyan, who is 
one of the newly-charged defendants and was taken into custody on 
March 25, 2021 -- is currently detained pending trial in this case.  
As previously noted, defendant Hayrapetyan is alleged to have stolen 
the identities of at least two people and two businesses in 
furtherance of the fraudulent scheme.  (See, e.g., id., ¶¶ 27.a, 
27.b, 27.c, 31, 33 (Overt Act Nos. 1-7), 50-51.)  The government 
understands that defense counsel currently are permitted to conduct 
client meetings through both in-person meetings and, where necessary, 
video-teleconferencing technology at the Metropolitan Detention 
Center, where defendant Hayrapetyan is believed to be housed. 
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including requiring that defense counsel maintain sole custody of the 
confidential discovery materials.  See Johnson, 191 F. Supp. 3d at 
374 (“[G]iven the sensitive nature of the covered documents, 
Defendants’ ‘just trust us’ approach is simply inadequate as a matter 
of law.”).  Such conditions requiring defendants review discovery 
with counsel are not uncommon notwithstanding defendants’ typical 
arguments regarding prejudice.9  See, e.g., Concord Mgmt., 404 F. 
Supp. 3d at 77; United States v. Johnson, 191 F. Supp. 3d at 374; 
United States v. Workman, 2019 WL 276843, at *2. 
D. 
The Terms of the Proposed Modified Protective Order are 
Reasonable and Narrowly Tailored to Address the 
Demonstrated Risks of Specific Injury 
The government’s proposed protective order is the same in nearly 
all material respects as the standard protective order the government 
initially sought, and which is, notably, fundamentally the same order 
that is the product of negotiation with the Federal Public Defender’s 
Office and which is used throughout this District in criminal cases.  
(See ECF 65-1; ECF 65, André Decl., ¶ 14.)  Rather than repeat the 
 
9 Defendants R. Ayvazyan’s and T. Dadyan’s violations of this 
Court’s orders and unremitting criminal conduct have given the 
government significant cause for concern about their continued review 
of PII in this case, even through their counsel.  Indeed, given the 
assurances made by counsel for defendant R. Ayvazyan in response to 
the risks identified by the government in its initial application, 
the government’s concerns now extend to counsel’s ability to monitor 
their client and prevent his misuse of discovery.  (ECF 74 at 3.)  
Nonetheless, the government is not at this stage seeking an order 
barring defendants from even having access to confidential discovery, 
as courts have found appropriate in certain cases.  See, e.g., United 
States v. Concord Mgmt. & Consulting LLC, 404 F. Supp. 3d 67, 77 
(D.D.C. 2019) (collecting cases where “courts have outright barred 
counsel from discussing certain discovery with their clients”) 
(emphasis in original).  However, should the government become aware 
of continuing abuses of discovery, including for the purpose of 
committing new crimes, following the entry of the proposed modified 
protective order, the government reserves its rights to seek 
additional restrictions on the discovery in this case under Federal 
Rule of Criminal Procedure 16(d)(1). 
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explanation as to why these terms are reasonable and tailored in 
light of the risks of specific injury posed by the defendants in this 
case, the government expressly incorporates its initial application 
by reference.  (See ECF 65, André Decl.)10  The lone material addition 
to the initial protective order is to include one additional category 
of confidential information, defined as “CI Materials,” which is 
reasonable and tailored to address the unique risks presented by the 
production of information provided by confidential informants or 
cooperating witnesses who may testify at trial.11   
E. 
An Ex Parte Order Is Appropriate and Necessary to Limit the 
Opportunities for Defendants to Commit New Crimes While on 
Pretrial Release and Cause Further Harm 
The government submits this application on an ex parte basis for 
at least three reasons.   
First, the Court should take immediate action to prevent the 
original defendants from using the discovery materials to commit new 
crimes, including further laundering and spending of the stolen 
disaster relief money.  This is a demonstrated risk of specific 
injury, and that risk is ongoing due to the sheer number of fake, 
stolen, and synthetic identities and fake and stolen business names 
available to the original defendants, and accompanying bank accounts.  
Defendants R. Ayvazyan and T. Dadyan have already been indicted for 
using two of the dozens of the fake, stolen, and synthetic identities 
 
10 The terms of the proposed modified protective order, including 
the conditions precluding the defendants from possessing sensitive 
personal and financial information, also are consistent with prior 
protective orders entered by this Court.  See, e.g., Protective 
Order, United States v. Ohiri, No. CR 19-0042-SVW, Dkt. 35 (C.D. Cal.  
Mar. 14, 2019). 
11 The government anticipates producing such discovery upon the 
Court’s entry of the proposed modified protective order or imposition 
by the Court of otherwise adequate measures to protect any 
confidential informants in this case. 
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contained in the discovery materials.  And the government’s 
investigation into the commission of even more crimes is ongoing.   
Second, whereas the original indictment concerned 35 PPP and 
EIDL loans, the first superseding indictment concerns over 150 PPP 
and EIDL loans, and the government recently provided counsel for the 
original defendants a substantial volume of new discovery materials 
relating to these new loans.  This presents additional opportunities 
for the original defendants to cause more harm.   
Third, this past week, the government produced a substantial 
volume of discovery to counsel for the four newly-added defendants, 
who pose the same risks and threats of harm as the original 
defendants. 
Thus, while the government complies with its discovery 
obligations in a timely and diligent manner, the significant risk of 
continued discovery abuses and the commission of new crimes increases 
every day under the current protective order.  The Court’s 
intervention on an ex parte basis is necessary to implement standard 
safeguards over the discovery through the government’s proposed 
modified protective order.  
IV. 
CONCLUSION 
For the foregoing reasons, the government respectfully requests 
that this Court (1) enter the government’s proposed modified 
protective order filed concurrently herewith; and (2) enter the 
proposed order filed concurrently herewith requiring counsel to all 
defendants to take possession of all discovery designated as 
confidential under the existing protective order, whether in hard 
copy or digital format, that counsel previously provided to 
defendants. 
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