Court filing
TRANSCRIPT filed as to Defendant Richard Ayvazyan, Marietta Terabelian, Artur… — USA v. Ayvazyan et al (Dkt. 299)
Record facts
| Court | U.S. District Court for the Central District of California |
|---|---|
| Filed | 2021-04-27 |
U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 299 · 2021-04-27 · Docket on CourtListener
Summary
Reporter's transcript of a video-conference hearing on April 2, 2021 in USA v. Ayvazyan et al, No. 2:20-cr-00579-SVW, before Judge Stephen V. Wilson of the U.S. District Court for the Central District of California, filed April 27, 2021 as Doc. 299. The court states that the status conference concerns an ex parte application for a modified protective order, which is opposed, and first questions Assistant United States Attorney Brian Faerstein about what the indictment alleges. Faerstein says the initial indictment, returned in November, named four defendants and that the first superseding indictment alleges six stolen identities of real people. The court also asks about the dispute over whether two names the indictment treats as aliases belong to real people. The 51-page transcript ends when proceedings adjourned at 12:58 p.m., followed by the reporter's certificate dated April 8, 2021.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
THE HON. JUDGE STEPHEN V. WILSON, JUDGE PRESIDING
UNITED STATES OF AMERICA, )
)
Plaintiff,
)
)
vs. ) NO. 20-CR-00579-SVW
)
RICHARD AYVAZYAN, et al.,
)
)
Defendants.
)
___________________________________)
REPORTER'S TRANSCRIPT OF PROCEEDINGS
Video Conference
Los Angeles, California
Friday, April 2, 2021
Lisa M. Gonzalez, CSR 5920, CCRR
Official Reporter
United States District Courthouse
350 W. First Street, Room 4455
Los Angeles, California 90012
213.894-2979; www.lisamariecsr.com
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APPEARANCES:
FOR THE GOVERNMENT: OFFICE OF THE U.S. ATTORNEY
BY: BRIAN R. FAERSTEIN
ASSISTANT UNITED STATES ATTORNEY
312 North Spring Street, Suite 1200
Los Angeles, CA 90012
213-894-2400
U.S. DEPARTMENT OF JUSTICE
BY: CHRISTOPHER FENTON
1400 New York Avenue, NW
Washington, DC 20530
202-320-0539
FOR THE DEFENDANTS: STEPTOE AND JOHNSON LLP
BY: ASHWIN J. RAM, ESQ.
633 West 5th Street, Suite 1900
Los Angeles, CA 90071
213-439-9443
BY: NICHOLAS P. SILVERMAN, ESQ.
1330 Connectiut Avenue NW
Washington, DC 20036
202-429-8096
DIAMOND AND ASSOCIATES
BY: DAVID D. DIAMOND, ESQ.
1200 Wilshire Boulevard, Suite 406
Los Angeles, CA 90017
213-250-9100
BIENERT KATZMAN LITTRELL WILLIAMS LLP
BY: JOHN LEWIS LITTRELL, ESQ.
903 Calle Amanecer, Suite 350
San Clemente, CA 92673
949-369-3700
MESEREAU LAW GROUP
BY: THOMAS A. MESEREAU, JR.
10100 Santa Monica Boulevard, Suite 300
Los Angeles, CA 90067
310-651-9960
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APPEARANCES (Continued):
LAW OFFICES OF FRED G. MINASSIAN INC.
BY: FRED G. MINASSIAN, ESQ.
101 North Brand Boulevard, Suite 1970
Glendale, CA 91203
818-240-2444
HANUSZ LAW, PC
BY: JOHN HANUSZ, ESQ.
800 Wilshire Boulevard, Suite 1050
Los Angeles, CA 90017
213-204-4200
TAHMAZIAN LAW FIRM PC
BY: JILBERT TAHMAZIAN, ESQ.
1518 West Glenoaks Boulevard
Glendale, CA 91201
818-242-8201
WERKSMAN JACKSON AND QUINN
BY: MICHAEL GREGORY FREEDMAN, ESQ.
888 West 6th Street, 4th Floor
Los Angeles, CA 90017
213-688-0460
LAW OFFICE OF PETER JOHNSON
BY: PETER JOHNSON, ESQ.
409 North Pacific Coast Highway
Suite 651
Redondo Beach, CA 90277
310-295-1785
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Los Angeles, California; Friday, April 2, 2021
11:33 a.m.
-o0o-
THE COURT: I see the lawyers' names on the
screen, and I have a schedule here.
Let me start the hearing in this way. I know that
the specific purpose of the status conference is with regard
to the ex parte application for protective order --
application for modified protective order. And there is
opposition. And there have been substantial briefs filed
with regard to this protective order, which is somewhat
unusual, but has to be addressed.
Before I can get to that specific question, I
would benefit from, perhaps, a better understanding of the
indictment. And I'm directing my questions initially to --
who is the prosecutor here? It's Andre, Julian Andre.
Where's Julian Andre?
MR. FAERSTEIN: Your Honor, I'm sorry. This is
Brian Faerstein on behalf of the United States. I'm also
joined by my colleague, Scott Paetty and Christopher Fenton.
Mr. Andre left our office about a month or two ago, but
myself and Mr. Paetty have made appearances, and Mr. Fenton
has been on the case from the inception.
THE COURT: Who are the other assistants?
MR. FAERSTEIN: The other AUSA is Scott Paetty
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from the U.S. Attorney's Office.
THE COURT: How do you spell his name?
MR. FAERSTEIN: His last name is P-a-e-t-t-y.
THE COURT: He is not appearing here today;
correct?
MR. FAERSTEIN: He is present. I will be taking
the lead for the Government, but he is present, as well as
Mr. Fenton.
THE COURT: I see. So my questions initially are
directed to you, and maybe defendants can benefit in some
way from my questions also.
I read the indictment several times, and it has so
many details in it that I want to make sure I get the thread
of it and not get lost in the details.
So understanding that it's just an indictment and
the lawyers should understand that nothing is likely to be
decided at this hearing, and my questions are really
questions trying to get some insight as to at least what the
indictment alleges, which is the starting point.
And I'm not interested in how the indictment or
the evidence meshes to specific statutes or charges, I'm
just interested, in nonlegal term, let's call it "The
story." Every case has a story.
And so here is my very rough understanding. And
I'm not interested in too many details. I'm just trying to
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get the broad strokes.
My understanding is that the indictment alleges
that the scheme involved applications for these PPP loans
and Small Business Administration loans which appear to be
similar in purpose. Maybe there are some distinctions. And
that what happened, according to the indictment, was that
the defendant -- and the focus as far as I can see from the
pleadings -- and I'm doing this also to better understand
the motions to suppress which are on calendar for next
week -- seem to put defendant Ayvazyan and Terabelian at the
helm here, so to speak.
And that there was a series of PPP and SBA loan
applications for the benefits under those programs. The
moneys under those programs were limited to certain business
expenses and purposes, and that instead of using those funds
for business purposes, they were used for the personal
purposes of the defendants buying homes or other things.
And that -- and carrying out the scheme -- and
this, perhaps, gets closer to the protective order issue --
the Government maintains that there were some fictitious,
non-existent persons or entities that were the applicants
for these loans.
Two prominent names in the indictment are Zhadko
and Kauichko, and that they are the -- in fact, the
indictment so alleges that those are AKAs or names used by
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Ayvazyan and his wife Terabelian. I don't fully
understand -- maybe I should, maybe it's my deficiency, but
I don't fully understand the other defendants' roles in the
indictment.
Were they persons who were similarly situated to
Ayvazyan and Terabelian, or were those persons who somehow
involved themselves in the scheme to help benefit the
Ayvazyan and Terabelian?
So, as a first matter, I'll just ask you,
Mr. Faerstein, in terms of what I just said, am I close to
the mark, or have I misread the indictment?
MR. FAERSTEIN: Thank you, Your Honor.
You are -- Your Honor is very close to the mark.
I will mention that there was an initial
indictment in this case, of course, back in November where
there were four defendants, Richard Ayvazyan, Marietta
Terabelian as Your Honor has already mentioned, along with
Richard Ayvazyan's brother, Artur Ayvazyan and his wife,
Tamara Dadyan.
The indictment at that time alleged, as Your Honor
described, a conspiracy to submit fraudulent loan
applications for COVID-19 disaster relief fund. And the
core component of the conspiracy and the scheme is using
fake, stolen and synthetic identities of individuals, as
well as entities to submit these fraudulent loan
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
applications for --
THE COURT: That's what I described, I thought.
And you make a point here about the synthetic and stolen.
From my reading of the indictment -- and it has so many
details -- it appeared to me that there was only one -- I'll
call it a real person -- whose identity was stolen or
misused to get these loans and that all the other names of
the businesses, at least from the indictment's standpoint,
were used or synthetic. I guess that means made up; right?
MR. FAERSTEIN: It does, Your Honor.
THE COURT: So in terms of real persons whose
identity was somehow stolen or misused and manipulated for
the purposes of the indictment, how many persons of that
kind were there?
MR. FAERSTEIN: Well, Your Honor, I was going to
mention, the Government --
THE COURT: Just answer my question. Listen to
what I'm saying. There are a lot of people here, and I'm
trying to unearth a better understanding so that I can do my
job. This is not the time to argue. I'm just interested in
getting my questions answered. Not long-winded answers.
So answer my question "yes" or "no" first, and
then give me a further answer if there is one.
MR. FAERSTEIN: Yes, Your Honor.
There are six specific stolen identities of real
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people alleged in the first --
THE COURT: Why didn't you say that at the outset.
That was my question.
MR. FAERSTEIN: I apologize, Your Honor.
THE COURT: Then, are the six people mentioned in
the indictment?
MR. FAERSTEIN: They are mentioned in the
first-superseding indictment, Your Honor.
THE COURT: And do these people claim, as per the
indictment, that they discovered the misuse because of money
unexplainably going to their bank account or the business
bank account?
How is it that they knew their identity was
misused? I mean, when the application was made in the name
of a real person whose identity was misused or stolen, did
the PPP or the SBA wire the money to their bank account, or
was it somehow directed somewhere else? And, if so, how did
these persons know that their identity was misused?
MR. FAERSTEIN: Yes, Your Honor. The money was
not wired to these individuals, it was wired to bank
accounts controlled by the defendants in this case. And as
part of the investigation of these fraudulent loan
applications, agents have interviewed a number of the
witnesses or alleged identity theft victims in sort of
trying to figure out did you submit this loan application
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
and they have confirmed they have not.
A couple of the other identity theft victims have
not been interviewed, but I will also mention there are
numerous other individuals that are not alleged in
aggravated identity theft counts in the first-superseding
indictment, but whose identity we believe, based on
interviews with them, have also been used and stolen and
used in connection in furtherance of the conspiracy.
THE COURT: All right. And I did read -- my
research is not complete on the motions that are pending,
but I did read the declaration or affidavit by the FBI agent
in furtherance of the warrant.
Well, before I get to that, let me ask a question
about Zhadko and Kauichko.
There seems to be a clear dispute between the
defendants and the Government as to whether Zhadko and
Kauichko are fictitious or real. In the FBI agent's
declaration, there is information, at least from that
declaration, that the FBI agent says supports the view that
they're not real, but the defendants claim they are real.
I'm going to ask you briefly what evidence is there that
they're not real, and give me your response.
MR. FAERSTEIN: Yes, Your Honor. With respect to
the identifying information for, for instance, Iuliia Zhadko
and the drivers' licenses that were on defendant Ayvazyan's
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phone and the social security number, that information is
not real. There may be an individual named Iuliia Zhadko,
but the information in these profiles that the defendants
were in possession of is not real.
THE COURT: One moment. And you say that the
information that you received, was this from the search of
the phones at the Miami Airport?
MR. FAERSTEIN: Both in terms of the search of the
phones at the Miami Airport, as well as the cards that the
defendants had on them during that search.
THE COURT: But it stems from the search at the
Miami Airport?
MR. FAERSTEIN: Yes, Your Honor.
There's also --
THE COURT: Why do you -- yes, it stems from Miami
Airport.
MR. FAERSTEIN: The agents had previously
identified the person Iuliia Zhadko or the identity Iuliia
Zhadko before the Miami stop, and they did so in connection
with investigating suspected fraudulent loan applications
for COVID-19 disaster relief funds.
One of the companies that they were investigating
in the summer of last year before the border stop in October
was a company called Timeline Transport. And that
particular PPP loan application was submitted by an
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individual named Iuliia Zhadko.
THE COURT: I know that because that's highlighted
in the FBI agent's affidavit.
Let me, perhaps, be a little disjointed and
backtrack here and ask you how did this all start.
MR. FAERSTEIN: How did the investigation start,
Your Honor?
THE COURT: Yes.
MR. FAERSTEIN: Well, after Congress passed the
CARES Act, there was an emphasis on trying to root out fraud
in connection with the Payment Protection Program, as well
as this other program, the Economic Injury Disaster Relief
program because those funds were obviously sorely needed by
the businesses that legitimately needed them.
In this particular case, this company Timeline
Transfer was among a few that -- of construction companies
that had some hallmarks or question marks that the FBI began
investigating.
THE COURT: You know, you say a lot of things, and
understand I'm not being personally critical, but I have a
goal here, and I just can't let you keep on talking.
It seems to me what you're saying is that it
became -- began with some sort of audit.
MR. FAERSTEIN: I can't say whether it was an
audit, Your Honor, or an anonymous tip.
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THE COURT: You can't say because you don't know,
or because you feel that you don't want to make that
revelation known?
MR. FAERSTEIN: I, sitting here right now without
going back to the specific warrant affidavit, I can't say
because I don't know the specific --
THE COURT: Why don't you know? I mean, you
should know that. I mean, you're the prosecutor.
Are you telling me that you don't know how this
all started? I mean, I find that stunning.
How did this start?
MR. FAERSTEIN: It started with an investigation
of a company called Timeline Transport.
THE COURT: You said that, and the impression I
was getting was that there was this program, and the
Government, in its wisdom, said, well, maybe we ought to
check to see if everything is kosher about this business,
this program. And so they sort of, like the IRS, they do
random audits and sometimes the IRS -- someone calls up the
hotline and says, you know, "Dr. Smith down the street here,
he keeps four sets of books. I know where they are." I
mean, you know, all kinds of reasons to start audits.
Was this audit started because there were some
hallmarks? I mean, we all know the IRS has some gadgetries,
algorithms, programs, where they look for indicia of fraud,
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use that as a starting point and sometimes it's someone who
shows up and says, "I've got a good lead for you."
How did this one start?
MR. FAERSTEIN: Your Honor, I do not know sitting
here right now whether it was an audit or algorithms or
whether it came in through an anonymous tip. My colleague,
Christopher Fenton, will be able to answer that question.
THE COURT: Well, who is the lead prosecutor in
this case?
MR. FAERSTEIN: Your Honor, I'm not sure we have a
designated lead prosecutor. I am speaking here today on the
ex parte application.
THE COURT: You know something, this is just not
satisfactory. I mean -- I mean, if it were a defense lawyer
who said, you know, "I'm carrying the bags. I'm the guy
who's going to try the case" and couldn't answer the
questions, I'd be equally perturbed.
I mean, I'm taking pains as is my responsibility
to understand what's going on because there's a lot at
stake, and you're supposed to be helping me, not persuading
me, but answering my questions. And I've used that word
before stunned by the fact that you don't know how this
began. It may not be pivotal, but it --
Let me turn to something related.
MR. FENTON: Your Honor, this is Christopher
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Fenton for the Government as well. I can answer your
question if it would please the Court.
THE COURT: Go ahead and answer.
MR. FENTON: Sure. So the Department of Justice
worked with an independent expert to audit data from the SBA
to try to find certain hallmarks for fraud. What we found
in this particular instance, without going into too much
detail, unless the Court would prefer that --
THE COURT: No.
MR. FENTON: -- what we found here is that there
was a certain grouping of individuals who appeared to be a
ring who were using common types of fraudulent documents and
also using fake IDs. One of those fake IDs was
Iuliia Zhadko.
Once we identified that ring using the SBA data,
what happened from that date forward was we started to
basically follow the money. We followed the money and found
that there were other applications submitted by
Iuliia Zhadko or that went into Iuliia Zhadko's bank account
or bank accounts --
THE COURT: Hold on. Because you're getting
closer to what I was interested in. You're saying that
there were certain hallmarks about the Timeline loan or
about Zhadko.
In other words, was the initial focus on Zhadko?
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MR. FENTON: Iuliia Zhadko. The initial focus was
on a grouping of individuals that included Iuliia Zhadko.
THE COURT: But I mean there must have been a
gazillion people applying for loans in this program.
How was it that this Zhadko stood out or became
the focus of some inquiry?
MR. FENTON: Well, in some instances you can
readily identify that the individuals are not actually real
people by doing background searches.
There was also an issue that they were submitting
similar supporting documentation. So the SBA data was able
to identify that similar types of payroll reports or similar
IRS tax forms had been filed, and they would look at the
similarities, and say, well, that's strange that this group
of companies that otherwise don't have any connection, you
know, are submitting similar types of forms.
THE COURT: Hold on.
And how many companies were identified as
applicants by virtue of the focus on Zhadko?
MR. FENTON: So -- well, there was a handful of
companies that were tied to Zhadko, including Timeline
Transport, Top Quality Construction, and then also another
one Touring Info Solutions.
THE COURT: And are those companies in the
indictment? Timeline, I know is. Top -- whatever it was
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also; correct?
MR. FENTON: Yes. And Touring Info Solutions as
well.
THE COURT: I see.
MR. FENTON: And one additional point, Your Honor,
that I think would be helpful is that often Department of
Justice reviews suspicious activity reports that are
provided by banks which provides leads as well. So these
are not leads or complaints that are filed, but those are
investigations obviously conducted by financial
institutions.
THE COURT: I see.
MR. FENTON: One additional point that I think
would be helpful to Your Honor --
THE COURT: Was there such a report filed by a
bank in this instance?
MR. FENTON: Yes, there were SARs reports, yes.
THE COURT: And were those reports focused on
Zhadko?
MR. FENTON: Yes, Your Honor.
THE COURT: And none of that to my memory is
described in the declaration, the affidavit.
MR. FENTON: Well, the Government is not able to
rely on SARs for the purpose of search warrants or for
alleging crimes, so we don't allege --
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THE COURT: What is SARs?
MR. FENTON: Suspicious Activity Report generated
under the bank --
THE COURT: I know, but here's what I'm getting at
and this maybe doesn't relate to this specific issue. I'll
zero in on it hopefully with further questions, but -- I may
have the dates off a bit, but my memory is that Miami
Airport search occurred, I think, in the middle of
October 2020; correct?
MR. FENTON: Yes, Your Honor. October 20th.
October 19th and 20th.
THE COURT: Yeah. And that the indictment was
returned early November, mid November.
MR. FENTON: That's correct, Your Honor.
THE COURT: So given the amount of detail in the
indictment, it seemed that -- and, of course, the fact that
in the Miami situation, the agents there were prompted by
agents who were investigating this case. So it appears that
all the documentary evidence in the indictment predated the
search.
MR. FENTON: That's correct, Your Honor. That's
correct.
THE COURT: No "and." No "and." Just answer the
question. That's the answer; right?
MR. FENTON: Yes, Your Honor.
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Case 2:20-cr-00579-SVW Document 299 Filed 04/27/21 Page 18 of 51 Page ID
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THE COURT: I'm going to turn now to the Miami
search, not in terms of its legality because the parties
have put that issue squarely to the court. I understand the
issue, and it has to be resolved, and I will resolve it, but
I don't need any further input on that now.
My understanding of the Miami search was that
Ayvazyan and Terabelian were coming back to the
United States from some Caribbean island and that their
arrival was tipped off to Customs people by agents, FBI
agents.
Again, I'm not getting into the Fourth Amendment
questioning.
When Ayvazyan and Terabelian were questioned and
searched, the declaration says they found identity
information on Ayvazyan of Zhadko; is that correct?
I'm asking you, Fenton. Is it -- you're speaking,
or is it now Faerstein? Who is going to speak to that?
MR. FENTON: I can answer that question,
Your Honor.
Yes, identity information was found on
Mr. Ayvazyan.
THE COURT: And Ayvazyan. And it was Zhadko
identity information?
MR. FENTON: Yes, Your Honor.
THE COURT: And what other identities, other than
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that in his name Ayvazyan, were found on him?
MR. FENTON: A credit card from Viktoria Kauichko.
THE COURT: Okay. Those are the two principal
things?
MR. FENTON: Yes, Your Honor.
THE COURT: And was Viktoria Kauichko known to the
Government before that?
MR. FENTON: Yes, Your Honor.
THE COURT: How?
MR. FENTON: Through the same process. Because it
was a ring, the Government followed the money. And what the
Government determined is what was essentially outlined in
the October 20th Complaint that was filed, which is that
money was used, disaster relief money was used to purchase a
house that Mr. Ayvazyan and Ms. Terabelian --
THE COURT: I --
MR. FENTON: -- so we traced the money that was
used to buy that house --
THE COURT: Was that all the money that went in
escrow?
MR. FENTON: That's -- yes, a lot of -- a lot of
the funds went into the escrow, not all of them, yes.
THE COURT: Now, what other physical evidence was
taken or seized from Ayvazyan and Terabelian at that Miami
search, other than the identity of Zhadko and Kauichko?
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MR. FENTON: So there were the credit cards.
There was --
THE COURT: Credit cards in whose name?
MR. FENTON: The credit cards -- the identity
document that you referred to, Your Honor, those are credit
cards in the name of Iuliia Zhadko and Viktoria Kauichko.
So that's what I'm referring to. Credit cards.
THE COURT: I see. And then they were questioned,
and what information -- what did they say in that
questioning, if anything, that the Government intends to use
or was a lead to something else?
MR. FENTON: What statements were made during --
THE COURT: Yes. Maybe just make it a broad
question. What did they say?
MR. FENTON: The Government is not intending to
rely on any statements that were made during that
questioning --
THE COURT: What did they say?
MR. FENTON: So they were basically asked, you
know, was commonly referred to as the five Ws. The who,
what, where, why, and when with respect to who they were and
their travel.
And when they were confronted about the identities
with respect to Mr. Ayvazyan, Mr. Ayvazyan claimed that
Iuliia Zhadko was his girlfriend, and he was just concealing
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that information from his wife.
And his wife, when she was confronted with
Viktoria Kauichko identity, she said that -- she initially
said I don't know who that is, and my husband put that card
in there, in my wallet.
THE COURT: I see.
And what about the other defendants, beginning
with Ayvazyan, Dadyan, Grigoryan and so forth? I guess
there are two Dadyans here.
How did they become part of the indictment? Were
they persons who did things to help Ayvazyan and Terabelian
in the alleged scheme, or did they have their own scheme?
MR. FENTON: So they were co-conspirators in the
same scheme. And what is alleged is that the disaster
relief funds were fraudulently applied for, and that the
proceeds were then taken to buy a variety of different
things, including these luxury homes. And the Government
was able to follow the money and find that the disaster
relief funds were being used to buy these homes. And that's
how we initially landed on Richard Ayvazyan and
Marietta Terabelian.
And then from there we identified the other
individuals who were involved in applying for and then
moving those criminal proceeds. And then that led us to
Artur Ayvazyan and Tamara Dadyan --
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THE COURT: When you say "moving," what exactly do
you mean?
MR. FENTON: Well, laundering and spending.
THE COURT: So the proceeds of the loans somehow
went to the applicants. Let's say Timeline. And then from
Timeline, at least according to the FBI affidavit, they were
shortly thereafter wired to this escrow account?
MR. FENTON: In some instances, yes, but there are
other ways that they laundered or spent --
THE COURT: How -- give me an example of how some
of these other defendants became co-conspirators, according
to the indictment.
MR. FENTON: Well, sir, so the other
co-conspirators all submitted or caused to be submitted
fraudulent PPP or EIDL loan applications.
THE COURT: In their names?
MR. FENTON: Some were in their names, some used
fake identities.
So, for example, Tamara Dadyan applies for several
loans in her own name, but also applied for many loans using
stolen, fake or synthetic identities.
THE COURT: Stolen, fake, or synthetic. Those are
different things. I mean --
MR. FENTON: That's right.
THE COURT: One is made up names and the other is
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stolen identities of real people. So you're saying it was
both?
MR. FENTON: That's correct.
THE COURT: And -- but when these other
defendants -- when I say "other," I'm referring to anyone
other than Ayvazyan and Terabelian -- applied for a loan and
got the proceeds, is the Government's documentary evidence
that the monies were shortly thereafter transferred to the
benefit of Ayvazyan and Terabelian?
MR. FENTON: In some instances, yes. Like one
example, Your Honor, would be Vahe Dadyan. So he obtained a
loan in his own name, using his own company, and then gave
nearly all of the proceeds were used to purchase one of the
houses. That's correct.
THE COURT: Is there an allegation that
defendants, other than Ayvazyan and Terabelian when making
these fraudulent loan applications, as the indictment
alleges, that they did it for their own benefit? In other
words, kept the money themselves?
MR. FENTON: Absolutely, Your Honor, yes.
THE COURT: So how were they -- how were those
schemes, even though they are similar in structure, related
to Ayvazyan and Terabelian?
In other words, if they had their own scheme to
obtain funds illegally, how is it tied to this overall
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conspiracy?
MR. FENTON: So the defendants -- the defendants
are working together to apply for these loans, teaching each
other how to use -- how to get --
THE COURT: There's a trial date, isn't there?
MR. FENTON: Yes, Your Honor.
THE COURT: When is the trial date?
MR. FENTON: The current trial date is May 4.
THE COURT: So does the Government have some
inside witness?
MR. FENTON: We do have at least one confidential
witness. Yes, Your Honor.
THE COURT: And when you say "confidential," was
that someone who -- is that a defendant?
MR. FENTON: No, Your Honor.
THE COURT: And has that person been identified to
the defense?
MR. FENTON: Not as yet, Your Honor, no.
THE COURT: I bet they're curious to know who that
might be.
When do you plan on telling them?
MR. FENTON: Well, Your Honor, so we have, in
connection with the application for the modified protective
order, we have included provision that would allow us to
share that information with their attorneys. The request is
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that that information not be shared with defendants because
there's a concern with respect to the safety of that
particular individual.
THE COURT: But, in other words, what is the --
are there links between these defendants in terms of aiding
and abetting each other, or is -- do these defendants -- the
defendants other than Ayvazyan and Terabelian have done
similar things to what is alleged against Ayvazyan and
Terabelian for their own -- just for their own benefit?
MR. FENTON: Yes, Your Honor.
THE COURT: What is the linkage?
MR. FENTON: Well, the linkage is that they're
applying for -- they're fraudulently obtaining these funds,
and then they're transferring the funds amongst each other
in some instances.
THE COURT: Is Ayvazyan and Terabelian
transferring funds they got from these others too?
MR. FENTON: To some of the individuals, yes.
THE COURT: I see.
MR. FENTON: The theory --
THE COURT: What is the Government's theory as to
why they're doing that? Why wouldn't they just keep the
money?
MR. FENTON: Well, it's our understanding that
they're taking a large portion of those funds and they're
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using them to buy houses, and they fancy themselves to be
real estate experts and presumably they'd flip them and sell
them for some profit as part of an effort to launder money.
THE COURT: That is what I was getting at. In
other words, let's say, for example, Dadyan filed -- had a
false company and false identity, filed for a PPP loan, the
money went to that entity and Dadyan used the money to buy a
house or a car, or a watch or whatever, wouldn't that be --
why is that scheme part of Ayvazyan's scheme?
MR. FENTON: Well, they're sharing. I mean,
they're sharing the funds. So they may spend the money on
individual things here and there; right? So some of the
defendants might buy a personal luxury. They might buy a
wrist watch, like a Rolex or something of that nature.
Another one might buy a Fendi handbag.
THE COURT: Are you saying that these defendants
bought things together; in other words, as a group?
MR. FENTON: They raised the money together, and
then they spent the money together on some things like these
houses.
THE COURT: The houses, were they handled jointly
or were they held in individual defendants' names?
MR. FENTON: So one of the homes was purchased in
the name of Richard Ayvazyan and Marietta Terabelian, and
two of the other homes were purchased using the names of --
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Case 2:20-cr-00579-SVW Document 299 Filed 04/27/21 Page 27 of 51 Page ID
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one was purchase name of Iuliia Zhadko, and the other was
purchased in the name of another individual, Anna
Manukian (ph), who's believed to be a stolen identity. A
relative of one of the defendants whose identity was stolen.
THE COURT: And let me ask you this. The
defendants maintain that these co-defendants are -- they're
all relatives; is that your view also? Or do you have a
different view?
MR. FENTON: Our understanding is they're
relatives, they're close family friends.
THE COURT: I see.
MR. FENTON: Right.
THE COURT: And are there any fictitious people in
the case related to some of these other defendants, other
than Zhadko and Kauichko? Any other names like that?
MR. FENTON: Your Honor, are you asking -- just so
I can be clear about the question. Are you asking if there
are -- if some of the defendants are using other fake names
or aliases?
THE COURT: Yes.
MR. FENTON: Absolutely.
THE COURT: I mean, similar at least in style to
Zhadko and Kauichko?
MR. FENTON: Yes.
THE COURT: Just names you believe are synthetic
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as you call them?
MR. FENTON: That's correct.
THE COURT: Now, let me ask you about the SBA and
the PPP. The way I'm understanding the difference is that
in the funding process under the PPP program, the funding is
through private banks; and under the SBA process, it's
through the Government.
Is there some other difference in these programs?
MR. FENTON: No, Your Honor. I think that that's
the primary difference.
THE COURT: And were most of the loans PPP or SBA?
MR. FENTON: They -- so most of the loans were
PPP, but I mean, it's very close. There are a large number
of PPP and a large number of EIDL loans as well.
THE COURT: Now, how many of the loans were made
with what the Government alleges to be stolen identity of
real people?
MR. FENTON: So in the first-superseding
indictment, there's over 150 fraudulent loans. And this is
a rough estimate, Your Honor. But I would say that about
85 percent of those were -- used fake or stolen names.
THE COURT: But fake or stolen, those are two
categories. I'm asking who -- how many of the loans were
made by using the stolen identity of a real person?
MR. FENTON: Many of the loans. The synthetic
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identities are really a combination of information that is
in part real information and in part fake information.
For example, in this particular case, a lot of the
identities appear to be Russian foreign exchange students or
foreign exchange students from Eastern Europe, and their
names and their birthdates are taken and then other
information is added to that to build a profile of an
individual. And that profile, which we call synthetic, is
then used to take out the loans.
THE COURT: So what you're describing is a real
person whose biography was manufactured?
MR. FENTON: Right. And I can give you a good
example here. Iuliia Zhadko. It's our understanding that
Iuliia Zhadko is a female Russian foreign exchange student
who has the date of birth that is on that driver's license,
but when you look at the way that Iuliia Zhadko's name has
been used in this particular instance, Richard Ayvazyan has
turned him into a man and given him additional information.
And then if you see in the submission that we made
most recently, the ex parte submission, you can see three
examples of three different men who are presented to be
Iuliia Zhadko. That's a perfect example of a synthetic
identity.
THE COURT: You know, it almost seems like -- I
hate to make humor of such an important issue, but that
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there is this program on television where the format is --
you know, the panel asks questions -- To Tell the Truth. My
wife just told me. Where the panel asks questions and then
they have to guess who the real person is, and then that
real person stands up. It's kind of dramatic. But I'm
asking whether the Government has ever met or talked to this
foreign exchange student, Zhadko.
MR. FENTON: We have not spoken to Ms. Zhadko, no.
THE COURT: Do you know -- I mean, you said you
thought she's a foreign exchange student. Have you tried to
locate her?
MR. FENTON: Not at this point, Your Honor.
THE COURT: Well, at this point. I mean, the
trial could be around the corner.
MR. FENTON: That's correct. I don't -- the
Government doesn't believe that we need to contact
Ms. Zhadko in order to prove our case, but Ms. Zhadko is in
Russia as far as we understand it, or at least hasn't been
in the United States. She left the United States a long
time ago.
THE COURT: Well, I mean, is there passport
information that gives some information about her coming and
going?
MR. FENTON: Yes. Yes, Your Honor. These
individuals who have been used to build synthetic identities
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in many instance are Russian or Eastern European foreign
exchange students, and we have identified their travel
information, saw that they came in on a Visa, saw that they
left and never came back, and then we produced that
information to the defense.
THE COURT: I see. Now, I'm going to ask you --
of course, I'm going to immediately turn it over to the
defendant because I'm anxious for their answer on this
question.
My understanding is that defendant Ayvazyan and
Terabelian claim that Zhadko and Kauichko are relatives of
theirs.
Is that what they're saying? I don't know.
MR. FENTON: I don't know, Your Honor.
THE COURT: They're saying they're real people,
and you seem to say the same thing with some qualification.
MR. FENTON: Well, but I think, Your Honor, what's
important here, if you look at the ex parte submission that
we made, the licenses that were found on the defendants for
Kauichko and for Zhadko show different people.
So for Mr. Ayvazyan to say, "Well, I know who is
Zhadko, and he told me it's okay for me to use his
identity." Well, Mr. Ayvazyan has been found with three
different Iuliia Zhadkos. Which one could possibly be the
right one?
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With respect to Ms. Kauichko, it's the same
information as well. They were found with identification.
There were two different identification documents for
Viktoria Kauichko. If you look at them, they are two
completely different people. It's impossible for that to be
the case that these individuals are giving --
THE COURT: I don't know what's possible or not.
That's for a jury to decide, not me.
What -- now, let me turn to the reason for this
hearing. What is, from the Government's standpoint, what is
the protective order about? What does the Government want
to protect or modify?
MR. FAERSTEIN: Yes, Your Honor. This is
Brian Faerstein again on behalf of the Government.
The discovery that we've produced contains a
significant amount of the personally identifiable
information that Mr. Fenton has just been describing. The
names --
THE COURT: Of which people?
MR. FAERSTEIN: Well, the individuals we've just
described, as well as numerous other individuals. We've
submitted some exhibits.
THE COURT: Are you talking about the real people
whose identity was taken?
MR. FAERSTEIN: Both the real people and the
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synthetic identity or profiles of those people, as well as
the drivers licenses.
THE COURT: The real people, so-called real
people, I can understand the argument, at least on its
surface, but why are you wanting to protect the identities
of synthetic people?
MR. FAERSTEIN: Your Honor, the Government's
concern is that the defendants in this conspiracy are using
the information of these synthetic identities to apply for
these fraudulent loans and to launder the proceeds. And the
best evidence of that happening after we brought -- after
the initial indictment was returned is that, as we describe
in our ex parte application and as the grand jury found in
the first-superseding indictment, defendant Ayvazyan, as
it's alleged, used the synthetic identity information of
Iuliia Zhadko to move money between bank accounts in the
name of Iuliia Zhadko and a company called Touring Info
Solutions, which has the sole signatory of Iuliia Zhadko and
to open a cryptocurrency account and to -- an account at
T.D. Ameritrade to move money that is traceable to the
fraudulent loan proceeds in this case.
Similarly, defendant Tamara Dadyan in this past
January and February was using the identity of one of the
aggravated identity theft victims in this case whose
initials are A.D. to try to access a bank account in A.D.'s
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name that we allege that she fraudulently set up with other
co-conspirators and to obtain the money in that bank account
in A.D.'s name by impersonating A.D.
THE COURT: But don't these defendants already
have that information?
MR. FAERSTEIN: Well, Your Honor, the Government
seized pursuant to the border search and then also search
warrants at seven different locations -- and this is all
between October 20th and November 5th -- seized a
significant amount of this information. And that consisted
of both digital devices, but also hard copy documents,
identification documents.
One example of that is Exhibit 2 to the
Government's ex parte application. And that information was
in our possession, and we brought down the indictment on
November 17th. And after the protective order, existing
protective order, was entered by the Court on December 11th,
the Government started to produce discovery the following
Monday, on December 14th, and that included the information
that we are concerned about. The synthetic identity
information, as well as the real victim information.
And within days of starting those productions on
December 14th, defendant Ayvazyan, Richard Ayvazyan, as we
allege and as the grand jury found, started moving money in
the Iuliia Zhadko's account and opened additional -- a
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
brokerage and a cryptocurrency account. That is --
THE COURT: So your fear is that if the defendants
had access to the information they previously allegedly
used, that they would continue to launder money?
MR. FAERSTEIN: Yes, Your Honor.
THE COURT: Now, anything is possible, but now
that the defendants know you're glued to these accounts, I
mean, human nature being what it is, it's unpredictable, but
isn't it less predictable that they would do such a thing,
even if they had done it in the past?
MR. FAERSTEIN: Your Honor, I wish that -- I wish
that could be said, but we have the grand jury finding,
making a probable cause finding in the first-superseding
indictment that defendants Richard Ayvazyan and Tamara
Dadyan did just that with the stolen identity information.
THE COURT: You say the grand jury found
something. I know that's part of our lure, but you've heard
of the adage that the grand jury would indictment a ham
sandwich?
MR. FAERSTEIN: I have, Your Honor.
THE COURT: So anyway.
Okay. I want to hear now -- it isn't that I've
been ignoring the defendants.
First of all, defendants don't have to say
anything. I mean, I'm peppering the Government with
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
questions to find out some background information only for
the purpose of helping me understand the motions and this
motion, but I haven't asked the defendants questions because
they don't have to say anything.
But I am interested in their view of this
protective order question. So I would take it that there's
probably one common response -- maybe I'm wrong.
Is there one lawyer who would best speak to that
question, or do I have to hear many lawyers? Who would like
to take the lead on that question?
MR. RAM: Your Honor, it's Ashwin Ram representing
Richard Ayvazyan.
THE COURT: Let me see where you are.
MR. RAM: Top of the screen, Your Honor.
THE COURT: Go ahead, Mr. Ram.
MR. RAM: A couple of big picture points
specifically with respect to the comments we just heard from
the Government with respect to a modified protective order.
The Court obviously considered the original protective order
and arguments in December, and the question is what has
changed from December to now.
And the Government is alleging that -- and they
went as far as, if I heard correctly, to say that the grand
jury found that discovery abuse is occurring. And discovery
is being used to commit crimes post -- you know, on pretrial
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
release. That's what I'm hearing.
And the problem -- there's several problems with
that theory, Your Honor. First and foremost is the
explanation you just heard from the prosecutors when you
asked them: What is the interdependence here? How are
these people connected in any way? Why is this not multiple
conspiracies and schemes you're alleging? All great
questions.
And the answer was: They're all connected.
They're passing around funds, information is being shared.
I quote, "They're educating each other on how to apply for
these loans;" right? So the problem with the Government's
theory, Your Honor, is that these identifications, credit
cards, name -- what are we talking about when we say
identification. The Government is talking about names.
They're talking about names in which profiles are built
behind those names.
THE COURT: And businesses.
MR. RAM: And businesses. Absolutely. And if
these things are being passed around to groups of dozens of
people, dozens; right? We're just at the tip of the sphere
according to the Government in their papers. They're still
investigating. So if these things are being passed around
and aren't contained, any remedial protective order measures
even if they were necessary -- and I'll address that in a
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
second -- would be wholly ineffective to accomplish anything
the Government is seeking here.
THE COURT: Say what you just said again. I
didn't hear.
MR. RAM: Sure, Your Honor.
So basically if these identifications, business
names, synthetic information, whatever we want to call it,
if it's being passed around to dozens of people as part of
this grand conspiracy that the Government has alleged, any
protective order now, you know, five months after the fact,
would have no ability to cabin what's already out there in
the community for dozens of people that aren't even charged
yet. That's point number one, Your Honor.
Point number two, if I may, is even more directly
to the point, and it's devastating to the Government. They
noted in their briefs in December, Steptoe and Johnson,
that's my law firm, Your Honor, has mechanisms to track and
identify and record who is reviewing discovery. When, how
long they spend on a single page, and whether anything is
downloaded, forwarded or otherwise manipulated. Okay? That
was an accurate representation.
And the -- where the Government literally hits the
wall here, Your Honor, is that we can affirmatively prove,
if you look at Exhibit 4 attached to the Government's
opposition to the ex parte application, Richard Ayvazyan
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
spent less than 20 seconds on average flipping through the
relevant pages of the discovery the Government has
identified.
THE COURT: I know. But I'm still a yellow pad
and pencil guy.
MR. RAM: Yes.
THE COURT: How long does it take to look at a
screen and write something down on a yellow pad?
MR. RAM: That's a great question, Your Honor. So
what we've seen from the data, which we provided to the
Court I believe in our submission under seal, in camera, is
there's -- literally it's consistent with flipping through
these pages. And unless they're alleging that Richard
Ayvazyan is rain man, and he's just picking up data:
Account numbers, names, date of births, driver's license
numbers as these pages are flipping every 20 seconds, I
mean, we have a different case here.
And, by the way, if that was true, Your Honor, I'm
also a pen and pad guy, but if that was true and Ayvazyan is
rain man and he's picked up these numbers just by flipping
through them every 20 seconds, again, another protective
order modifying conditions here would be wholly ineffective
because it's already in his head, and it's already in the
heads of the other defendants.
I won't speak for Tammy Dadyan because I'm not her
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
attorney, her attorney's on the line. I can tell you, and
Mr. Minassian can speak to it, it's unclear she's even
reviewed a single page of discovery, let alone flipped
through a page at a time.
So, you know, there's two fundamental core
problems here, Your Honor. One is there's been no
containment, so to speak, as to point one, and it's already
out there. We can't unring that bell. There's people in
the community that can be making transactions -- and,
frankly, the more fundamental point to address here is
there's this group of Ukranians or Russians that are out
there, the Government says they don't exist, they're not
real, they're fake, or even if they are real, they're not
the people who applied for these loans. And the Government
has repeatedly said in their briefs, this is a simple and
straightforward case. We agree. We absolutely agree.
At trial, the question is going to be: Are the
Ukranians real or some composite people purporting to be the
Ukranians, are they real? And did they shout from the
rooftops to the Armenian people and many of the people who
are charged in this case, you should apply for a PPP loan.
It's free Government money, and we'll help you do it.
And the question is: Did that happen? Are they
real, or are people purporting to be these Ukranians real?
It's that simple.
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
And as for the protective order --
THE COURT: I don't agree with that. I mean, at
least from what I've seen so far, I don't think it's that
simple because the defense will have to contend with at
least a declaration as proveable with a lot of
circumstantial evidence.
MR. RAM: I agree a trial would be necessary,
Your Honor, but just to come back to the key points on the
protective order here, the last point really is, if what the
Government is alleging is true in both the initial
indictment where there was one alleged real person versus
the superseding indictment where there's now six alleged
real people, right, whose identities were used in aggravated
identity theft counts, if that is true, the information is
already out there and known to each of the defendants
charged currently and unindicted co-conspirators, according
to the Government's view of the world, and that's not going
to change. One.
And two, there has been no material change in
circumstances from where we were at in December. My client
is going to plead not guilty, when he's arraigned on the
superseding indictment as to these new money laundering
charges. And fundamentally, the question is, is there a
Iuliia Zhadko out there running around engaging in
transactions, right, whether his name is really Zhadko or
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
not. Is he doing this?
THE COURT: Is it a he or a she?
MR. RAM: It's a he, Your Honor. As far as --
THE COURT: I see. And your position is this
Iuliia Zhadko is real?
MR. RAM: Yes, Your Honor.
THE COURT: And have you met that person?
MR. RAM: I have not, Your Honor.
THE COURT: Do you anticipate -- you don't have to
answer this or not -- that that person will appear at the
trial?
MR. RAM: I do anticipate that that person or an
agent for that person would be, and I would be relying on
the Government to make that available to us. But I know my
client is very interested in having the testimony of Zhadko
and some of the other -- frankly, some of the other
Ukranians and Russians that are part of --
THE COURT: Are these Ukranians and Russian people
in the United States now, or are they back in their home
country?
MR. RAM: From what I understand, some are back in
their home country. That was accurate when the prosecutor
represented that.
THE COURT: Do any of the other lawyers wish to
weigh in on this issue?
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
MR. JOHNSON: Yes, Your Honor. This is
Peter Johnson on behalf of Vahe Dadyan.
THE COURT: Who are are you speaking on behalf of?
MR. JOHNSON: On behalf of defendant number 8,
Vahe Dadyan.
We join the co-defendant counsel's statement, but
also add specific prejudice to Vahe Dadyan.
As the Court knows from reading the papers, there
were only two individuals that were alleged of discovery
abuses in this case. There are six other defendants that
are not alleged, but just simply are grouped into this.
And the specific prejudice to Mr. Dadyan is that
they're attempting to review hundreds of thousands of pages
of documents in the middle of a pandemic, and it would be
virtually impossible for me to sit down with the -- with
Mr. Dadyan and go through these documents when it's -- we
join that it's unnecessary.
So for those reasons, we would ask the Court to
deny the relief for the Government.
THE COURT: Last matter is the matter of
discovery. The defendants maintain that the Court issued an
order ordering the Government to complete discovery by
March 15th of this year and that that hasn't happened; that
the Government is still filtering or handing over documents
to the defendants as we speak.
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
What is the status of discovery?
MR. FAERSTEIN: Yes, Your Honor. And defendant
Richard Ayvazyan filed a motion on this last night, but this
goes to something Mr. Ram said.
THE COURT: Who represents Mr. Ayvazyan? Ram?
MR. FAERSTEIN: Mr. Ram.
First of all, the Government has complied with the
Court's discovery cutoff order for the discovery cutoff of
March 15th. Mr. Ram mentioned a moment ago that there are
no changed circumstances in this case since December. That
completely disregards the fact that there's a
first-superseding indictment that has significantly expanded
this case. It's doubled the number of defendants --
THE COURT: The first-superseding indictment
occurred after that discovery order. Is that what you're
saying?
MR. FAERSTEIN: No, Your Honor. The
first-superseding indictment was returned on March 9th and
it was unsealed on March 11th.
THE COURT: Of this year?
MR. FAERSTEIN: Of this year, Your Honor.
THE COURT: So that had to be after the Court
issued an order setting the March 15th discovery cutoff.
MR. FAERSTEIN: Yes, Your Honor. The Court's
order -- and, you know, of course, I'm interpreting it, but
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
the Court's order, as we understand it, pertains to
discovery relating to the indictment that was returned by a
grand jury on November 17th, 2020. We continued
investigating because the indictment now contains over 150
alleged fraudulent loans, not just 35 as the initial
indictment did, and it now contains four additional
defendants. And it contains money laundering conspiracy and
additional substantive counts on everything that's charged.
And it's a much broader indictment that has a lot of
discovery that supports the charges in this significantly
expanded indictment.
So we could not produce the discovery relating to
the new indictment, the investigation that we've been doing
since December until this new indictment was unsealed and we
arrested three of the four new defendants, but we
couldn't -- we couldn't produce that information relating to
the new charges, not the old charges, and we actually stated
that expressly in our discovery letter that went out to the
defendants on March 12th. We said that a substantial amount
of the discovery relates to the new charges and the new
defendants.
THE COURT: Okay. Okay.
MR. FAERSTEIN: Sorry, Your Honor.
THE COURT: So what is the intention from this
point forward? When is this going to end? I mean, is this
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
going to be a career project, or is there some cutoff where
you say we have enough -- I don't know why 35 wasn't enough
if you can prove it --
By the way, I always like to fast forward to the
trial because that's what I think that I should do. Are
there going to be 150 separate trials on each transaction?
MR. FAERSTEIN: No, Your Honor. And as we've
alleged in the superseding indictment, we have overt acts in
furtherance of the conspiracy to commit mail and wire fraud,
as well as the money laundering. And that describes a
number of the specific, fraudulent loan applications that
are indicative of the overall conspiracy.
THE COURT: How many of these 150 loans that you
say are now in this new indictment are going to be the
subject of evidence at the trial?
MR. FAERSTEIN: You know, Your Honor, I think --
we're thinking about how to present that in the most
efficient manner possible and, you know, whether it's
through summary chart and a summary witness or series of
summary witnesses from various lenders. That is something
we will seek to accomplish in an efficient manner as
possible, but it's unfortunate that we are continuing to
investigate, but we have the obligation where this fraud is
continuing even after the initial indictment and we're
continuing to investigate --
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
THE COURT: Well, are there -- of these additional
instances beyond the 35 or so that you mentioned in the
first indictment, are they loans that you just uncovered
that were made previous to the first indictment, or are you
saying that between the first indictment and the new
indictment there are over 100 fraudulent loans made?
MR. FAERSTEIN: Well, Your Honor, we've had --
we've been working to identify --
THE COURT: You know, Mr. Faerstein, I asked you a
question, and I expect an answer. You have a wind up.
Baseball pitchers, it's okay. Not lawyers. No wind ups.
Tell me what's the answer.
MR. FAERSTEIN: We identified additional loan
applications that we believed were fraudulent after the
initial --
THE COURT: How many between the 35 and the 150
you now claim?
MR. FAERSTEIN: How many were previously not
identified before the first indictment?
THE COURT: How many new loans did you uncover
after the first indictment that are now part of this new
indictment?
MR. FAERSTEIN: Your Honor, I can't give you a
specific or an approximate number on that.
THE COURT: Maybe Fenton has the answer.
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
What's the answer, Fenton?
MR. FENTON: Some of the loans were known to the
Government at that time, but they had not yet been tied to
the defendants. And we also believed that there were
additional co-conspirators that would be charged later.
THE COURT: What about the dates of loans? In
other words, what was the date of the initial indictment,
the one we issued the protective order on?
MR. FENTON: Mid November.
THE COURT: So between mid November and March 11th
I thought I heard --
MR. FENTON: That's correct, Your Honor. The
loans --
THE COURT: How many of the new loans in the
March 11 indictment were loans that were dated between
November of 2020 and March 11 of 2021?
MR. FENTON: Zero.
THE COURT: All right. That's an answer.
Let me thank the parties for appearing. You know,
this Zoom, it's not in-person stuff. I mean, it's hard to
manage. The purpose of the hearing was just as I stated and
the parties have responded. Sometimes I'm a little curt,
but that's not because I don't respect the lawyers, it's
because sometimes in this Zoom thing, there's no body
language. When we're in court, the lawyers can see the body
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
language. And, generally, if the lawyer is experienced,
they respond, but here there's no body language. It's
almost like a telephone call. So the only way I have to cut
you off is to cut you off, so no disrespect intended.
But thank you for giving me the information. I'm
going to chew on it and probably give you some direction
this afternoon as to how we want to approach.
Thank you.
(Thereupon, at 12:58 p.m., proceedings adjourned)
-oOo-
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L i s a M . G o n z a l e z , O f f i c i a l R e p o r t e r
CERTIFICATE
I hereby certify that pursuant to Section 753,
Title 28, United States Code, the foregoing is a true and
correct transcript of the stenographically reported
proceedings held in the above-entitled matter and that the
transcript format is in conformance with the regulations of
the Judicial Conference of the United States.
Date: April 8, 2021
Lisa M. Gonzalez
/s/__________________________________
Lisa M. Gonzalez, U.S. Court Reporter
CSR No. 5920
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