Court filing
NOTICE OF MOTION AND MOTION in Limine to Admit Evidence Inextricably Intertwined… — USA v. Ayvazyan et al (Dkt. 384)
Record facts
| Court | U.S. District Court for the Central District of California |
|---|---|
| Filed | 2021-05-31 |
U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 384 · 2021-05-31 · Docket on CourtListener
Summary
The government's Motion in Limine #2 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 May 31, 2021 as Doc. 384, with a hearing date of June 14, 2021. It asks the court to find that evidence of the defendants' possession of additional stolen or synthetic "reserve identities" and related instruments is inextricably intertwined with the charged fraud and money laundering conspiracies, and so outside Rule 404(b). The motion describes items the government says were seized in November 2020 residential searches, including driver's licenses, blank checks, notary stamps, agency seals and approximately $450,000 in cash. In the alternative, it argues the evidence is admissible under Rule 404(b). The 29-page filing carries the /s/ signature of Catherine Ahn and lists Exhibits 1-4 as filed under seal.
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
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TRACY L. WILKISON
Acting United States Attorney
SCOTT M. GARRINGER
Assistant United States Attorney
Chief, Criminal Division
SCOTT PAETTY (Cal. Bar No. 274719)
CATHERINE AHN (Cal. Bar No. 248286)
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) 894-6527/2424/3819
Facsimile: (213) 894-6269/0141
E-mail:
Scott.Paetty@usdoj.gov
Catherine.S.Ahn@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
No. CR 20-579(A)-SVW
GOVERNMENT’S MOTION IN LIMINE #2
TO ADMIT EVIDENCE INEXTRICABLY
INTERTWINED WITH THE CHARGED
OFFENSES; DECLARATION OF CATHERINE
AHN; AND EXHIBITS 1-4 (FILED UNDER
SEAL)
Hearing Date: June 14, 2021
Hearing Time: 11:00 a.m.
Trial Date: June 15, 2021
Location: Courtroom of the
Hon. Stephen V.
Wilson
Case 2:20-cr-00579-SVW Document 384 Filed 05/31/21 Page 1 of 29 Page ID
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“Anton Kudiumov,”
ARMAN HAYRAPETYAN,
EDVARD PARONYAN,
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, Assistant United States Attorneys Scott
Paetty, Catherine Ahn, and Brian Faerstein, and Department of
Justice Trial Attorney Christopher Fenton, hereby files this motion
in limine seeking admission of evidence inextricably intertwined
with the bank fraud and wire fraud and money laundering conspiracies
and schemes charged in the First Superseding Indictment.
This motion is based upon the attached memorandum of points and
authorities, the attached declaration and exhibits, the files and
records in this case, and such further evidence and argument as the
Court may permit.
Dated: May 31, 2021
Respectfully submitted,
TRACY L. WILKISON
Acting United States Attorney
SCOTT M. GARRINGER
Assistant United States Attorney
Chief, Criminal Division
/s/
CATHERINE AHN
SCOTT PAETTY
BRIAN FAERSTEIN
Assistant United States Attorneys
CHRISTOPHER FENTON
Department of Justice Trial Attorney
Attorneys for Plaintiff
UNITED STATES OF AMERICA
Case 2:20-cr-00579-SVW Document 384 Filed 05/31/21 Page 2 of 29 Page ID
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TABLE OF CONTENTS
TABLE OF AUTHORITIES......................................... ii
MEMORANDUM OF POINTS AND AUTHORITIES.......................... 1
I.
INTRODUCTION............................................. 1
II.
FACTUAL AND PROCEDURAL HISTORY........................... 2
A.
The Charged Conduct................................. 2
B.
Defendants’ Possession of Fraudulent Identification
Documents, Credit and Debit Cards, Account
Information, Notary Stamps, Business Information, and
Cash................................................ 5
III. ARGUMENT................................................. 7
A.
Evidence of Defendants’ Possession of Reserve
Identities and Supporting Instruments of Fraud is
Inextricably Intertwined with the Charged Offenses.. 7
1.
The Reserve Identity Evidence is Inextricably
Intertwined with the Fraud Conspiracy and
Schemes........................................ 7
2.
The Reserve Evidence is Inextricably Intertwined
with the Money Laundering Conspiracy and Scheme
.............................................. 17
3.
The Approximately $450,000 in Cash Found at
R. Ayvazyan and Terabelian’s Residence Is
Admissible.................................... 21
B.
The Reserve Evidence Is Inextricably Intertwined with
the Charged Offenses Even If They Could be Used for
Other, Uncharged Crimes............................ 22
C.
Even if Rule 404(b) Applied, the Evidence Would be
Admissible......................................... 23
IV.
CONCLUSION.............................................. 24
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TABLE OF AUTHORITIES
CASES
United States v. Bailey, 696 F.3d 794 (9th Cir. 2012)............. 24
United States v. Daly, 974 F.2d 1215 (9th Cir. 1992).............. 22
United States v. Dorsey, 677 F.3d 944 (9th Cir. 2012)............. 21
United States v. Lague, 971 F.3d 1032 (9th Cir. 2020)............. 24
United States v. Lillard, 354 F.3d 850 (9th Cir.2003)............. 16
United States v. Lo, 839 F.3d 777 (9th Cir. 2016)................. 17
United States v. Loftis, 843 F.3d 1173 (9th Cir. 2016).... 16, 17, 21
United States v. Montgomery, 384 F.3d 1050 (9th Cir. 2004)........ 15
United States v. Vizcarra–Martinez, 66 F.3d 1006 (9th Cir.
1995)........................................................ 16
United States v. Ward, 197 F.3d 1076 (11th Cir. 1999)............. 23
United States v. Williams, 989 F.2d 1061 (9th Cir. 1993)...... 16, 23
STATUTES
Fed. R. Evid. 404(b).......................................... passim
OTHER AUTHORITIES
U.S. Small Busineses Adminsitration, “Paycheck Protection
Program Frequently Asked Questions,” (June 25, 2020).......... 4
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MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION
The government respectfully moves this Court for a finding that
evidence of defendants’ possession and creation of stolen or
synthetic identities, which were collocated with stolen or synthetic
identities directly used to obtain fraudulent COVID-19 disaster
relief loans, are inextricably intertwined with the charged
offenses. As evidenced by the conconspirators’ own text message
conversations, such evidence is not within the scope of Fed. R.
Evid. (“Rule”) 404(b) and may be used by the government to prove the
charged fraud and money laundering conspiracies and schemes.1
On November 5, 2020, federal agents searched a residence that
proved to be the headquarters of a massive criminal conspiracy. The
home – which belonged to defendants Tamara Dadyan (“T. Dadyan”) and
Artur Ayvazyan (“A. Ayvazyan”) – contained all the parts for an
assembly line to produce fraudulent loan applications and then
conceal and spend the fraudulently obtained proceeds. These parts
include physical and digital evidence of identification documents,
social security cards, credit and debit cards, email and online
account information, checks/checkbooks, notary stamps and official
seals belonging to individuals other than the defendants, all found
in and around the same location within the home. Similar and
related evidence was also found on the iPhones belonging to
defendants T. Dadyan, A. Ayvazyan, Richard Ayvazyan (“R. Ayvazyan”),
and Marietta Terabelian (“Terabelian”), as well as at other
1 In light of the increased safety concerns associated with
COVID-19, the government is seeking to anticipate and resolve
evidentiary issues before trial so as to avoid lengthy sidebars with
counsel for the defendants proceeding to trial.
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residences used by other defendants who participated in the
conspiracies, demonstrating that the defendants shared these tools
and worked together towards common criminal objectives.
At trial, the government seeks to introduce evidence of this
assembly line for fraud, including both the evidence of identities
directly used to fraudulently obtain and use the loan proceeds
described in the FSI (“directly used identities”) and evidence
relating to additional stolen or synthetic identities and their
supporting instruments of fraud, to include fraudulent
identification documents, checks/checkbooks, credit and debit cards,
purported official records or certifying instruments, and related
email and online accounts (“reserve identities”). These identities
were interchangeable components of the fraudulent schemes and
conspiracies. The government respectfully moves this Court to find
that defendants’ possession and use of these reserve identities and
supporting instruments of fraud are inextricably intertwined with
the charged offenses and are not subject to Rule 404(b). As such,
this evidence is admissible during the government’s case-in-chief,
even if it relates to an identity that was not directly used to
apply for a fraudulent COVID-19 disaster relief loan.
II.
FACTUAL AND PROCEDURAL HISTORY
A.
The Charged Conduct
Defendants are charged with conspiracy to commit bank fraud and
wire fraud, conspiracy to commit money laundering, bank fraud and
attempted bank fraud, wire fraud, money laundering, and - for
certain defendants - aggravated identity theft, concealment money
laundering, and committing an offense while on pre-trial release.
(See FSI, generally (ECF 154).) The government alleged that the
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conspiracy began no later than in or around March 2020 and continued
until at least in or around August 2020 in Los Angeles County.
Specifically, defendants are charged with: (1) conspiring to
use, or cause the use, of stolen or fictitious individual and
business information to (2) submit materially false and misleading
information to the U.S. Small Business Administration, banks, and
lenders regarding (3) the business’ eligibility for a COVID-19
disaster relief loan. Defendants lied or caused other defendants to
lie about the applying business’ monthly payroll expenses,
employees, and even the names, status, and contact information for
the businesses and their purported owners or representatives. (See
e.g., FSI at ¶¶ 31, 33 (manner and means and overt acts of the bank
and wire fraud conspiracy).) Defendants submitted this information
through fraudulent PPP and EIDL applications using, among other
things, fraudulent identification cards, fraudulent social security
numbers, false or fictitious payroll reports, false or fictitious
federal employer tax identification numbers (“EINs”), and fraudulent
IRS tax forms. (Id.) By combining stolen and fictitious names,
dates of birth, and social security numbers, defendants were able to
create synthetic identities that could be used to create false
business names and entities. (Id. ¶ 1.)
Defendants further conspired to: (1) use, or cause the use, of
financial accounts, sometimes in the names of stolen or synthetic
identities and businesses, to (2) send and receive fraudulent loan
proceeds, and (3) use those proceeds for expenses prohibited by the
COVID-19 disaster relief loan programs. This conduct forms the
basis of the charged money laundering and money laundering
conspiracy counts. (Id. ¶¶ 53-54 (conspiracy) and 55-58 (individual
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counts).) These expenses included the purchase of at least three
residential properties in Tarzana, Glendale, and Palm Desert using
fraudulent loan proceeds. (Id. ¶ 33 (Overt Acts 16, 24, 36, 41, 44,
49 and 53).)
Through this alleged conduct, defendants are charged with
conspiring to and committing bank fraud (Counts 1-12) and wire fraud
(Counts 1, 13-20), money laundering conspiracy (Count 26) and, for
certain defendants, aggravated identity theft (Counts 21-25),
concealment money laundering (Count 27), and money laundering
(Counts 28-32) and attempted bank fraud (Count 33) while on pre-
trial release. (See FSI, generally.)
As alleged in the FSI, defendants conspired to obtain COVID-19
disaster relief funds intended to help workers stay employed and
small businesses stay open through the pandemic. (Id. ¶ 10.) The
U.S. Small Business Administration (“SBA”) distributed these funds
through the Paycheck Protection Program (“PPP”), which relied on
third-party lenders and processors to accept, review, and fund PPP
loans, as well as the Economic Injury Disaster Loan (“EIDL”)
program, which was directly administered by the SBA. (Id. ¶¶ 10-18,
33, 53.) Business applicants were expected to provide their monthly
payroll and operational expenses, number of employees, and proof of
those expenses through a payroll report or relevant tax forms, such
as an IRS Schedule C, Form 940, or Form 941. (See SBA, “Paycheck
Protection Program Frequently Asked Questions,” Q1 and 10 (June 25,
2020) (available at https://www.sba.gov/sites/default/files/2020-
06/Paycheck-Protection-Program-Frequently-Asked-Questions%20062520-
508.pdf.) The amount of money a business was eligible to receive
depended on these self-reported expenses, and businesses were
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required to use that money towards business, and not personal,
expenses. (FSI ¶¶ 11, 13, 17-18.)
B.
Defendants’ Possession of Fraudulent Identification
Documents, Credit and Debit Cards, Account Information,
Notary Stamps, Business Information, and Cash
In November 2020, the government executed residential search
warrants and seized several categories of evidence2 related to the
charged offenses, examples of which are described below:
1) Fraudulent California Driver’s Licenses (“CADLs”), social
security cards, and debit and credit cards in the names of
individuals other than defendants, including multiple CADLs
bearing the same name but different photos (see e.g.,
Fenton Decl. (ECF 207) Exh. 8 and Fenton Decl. (ECF 188)
Exh. 12);
2) Blank checks and checkbooks, including checks printed on
the wrong side of check paper, indicating manufacture (see
e.g., Exh. 1 (filed under seal) (see also Decl. of
Catherine Ahn); see also Fenton Decl. (ECF 207) Exh. 12);
3) Lists of email addresses and user account information with
associated passwords, including a page titled, “TAMMY INFO
FOR MLS ECT” (sic) with login information for “Tloxpo.com”3
and “Secureline tax ID” (See Fenton Decl. (ECF 207), Exh.
10; see also Exh. 2 (filed under seal));
2 See Gov’t Opposition to R. Ayvazyan and M. Terabelian’s Motion
to Suppress (ECF 188) at 2-4, 6, 10-11 and Exh. 8 - 12 attached to
Fenton Decl. (filed under seal); Gov’t. Opposition to A. Ayvazyan
and T. Dadyan’s Motion to Suppress (ECF 207) at 2-4, 6, 11 and Exh.
8 and 10-13 attached to Fenton Decl. (filed under seal).
3 TLOxp is an online subscription database that provides “an
efficient way to uncover, locate and verify information on
individuals and businesses . . .” (TransUnion, Products, TLOxp
(available at https://www.transunion.com/product/tloxp).)
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4) Seals for various state and federal agencies and notary
stamps in the names of individuals other than defendants
(See Fenton Decl. (ECF 207), Exh. 13); and
5) Approximately $450,000 in cash found in a bush outside
R. Ayvazyan and Terabelian’s residence (see Fenton Decl.
(ECF 188) Exh. 8);
(collectively, the “seized evidence”).
In addition to the above categories of seized evidence, the
government also seized digital devices during the November 2020
residential searches. This includes an Apple iPhone X found at
A. Ayvazyan and T. Dadyan’s residence with an Apple ID that included
T. Dadyan’s name (the “T.D. iPhone”).4 The T.D. iPhone contained
photos, internet history, and files, as well as text messages from
“tammy” to “Rich New.” T-Mobile subscriber records identified the
subscriber of the “Rich New” telephone number as “Iulia Zhadko,” a
synthetic identity defendant R. Ayvazyan is alleged to have used on
PPP and EIDL applications, bank accounts, digital currency accounts,
and to purchase a residential property in Glendale. (See FSI, ¶¶ 1,
2, 22, 33 (Overt Acts 19, 41, 42, 53, 59-61), and 58.)
These messages include, among other things, explicit
discussions of how to submit PPP and EIDL applications; using
databases, websites, and coached explanations to obtain Employer
Identification Numbers (“EINs”) for businesses; changing those EINs
by one digit when submitting an application; “fixing” bank
statements to match claimed payroll expenses; creating payroll
4 A forensic copy of the T.D. iPhone and a searchable report of
its readable contents, post-filter review, were produced to
defendants with Bates no. DOJ_PROD_0000160626.
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reports allegedly produced by payroll service provider Gusto; and
the use of dead individuals’ names and credit scores to meet lender
requirements. (See T.D. iPhone Excerpts 1-8, infra.5) The messages
further show how coconspirators convinced banks and lenders to
release frozen accounts or funds; contain discussions regarding who
should receive money from accounts into which fraudulent proceeds
had been deposited; and how much each should receive. (Id.)
III. ARGUMENT
A.
Evidence of Defendants’ Possession of Reserve Identities
and Supporting Instruments of Fraud is Inextricably
Intertwined with the Charged Offenses
1.
The Reserve Identity Evidence is Inextricably
Intertwined with the Fraud Conspiracy and Schemes
a.
The T.D. iPhone Messages Reveal the
Coconspirators’ Reliance on Reserve Identities
and Instruments of Fraud to Maintain the Fraud
Conspiracy and Schemes
Defendants used a plethora of names, identification cards,
identification numbers, and business identifiers – some real, some
fake, and some a synthetic combination of the two - to execute the
charged conspiracies and schemes. (See FSI, generally.) The
diversity of identities used in the PPP and EIDL fraud evince a
ready supply of information and tools to manufacture and validate
synthetic identities. The plethora of fraudulent identification
cards, credit and debit cards, checks/checkbooks, seals, and notary
stamps in names of individuals other than defendants’ found in one
of their homes confirms this. Furthermore, as revealed by the T.D.
iPhone text messages, the defendants needed access to a ready supply
5 The government has only provided selected excerpts relevant to
this motion and will identify the messages it intends to introduce
by the Court’s June 1, 2021 trial exhibit deadline.
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of personal and business information to execute the fraud schemes
and conspiracy. This information was further needed to open new
bank accounts when previous accounts were flagged for fraud. These
fake, stolen, and synthetic identities were all fungible: to the
extent one identity did not work, defendants simply grabbed the next
available one. As such, even when they weren’t directly used, the
evidence found during the residential searches is inextricably
intertwined with the charged offenses. They are therefore not
subject to analysis or exclusion under Rule 404(b) and should be
deemed admissible, subject to other evidentiary rules.6
Although the FSI focuses on the use and submission of stolen
and synthetic identities and fraudulent documentation, possession of
such personal and business information is a factual and logical
predicate to their use and submission, as charged. Furthermore, the
common possession and sharing of such information ties different
members of the conspiracy together. Similarities between
purportedly different PPP and EIDL applications show a common hand
in their preparation; the text messages retrieved from the T.D.
iPhone confirm it. These messages show that coconspirators relied
on a ready supply of preexisting identities, businesses, and
accounts to submit or cause the submission of fraudulent PPP and
EIDL applications, and then receive and transfer the proceeds. Text
messages between “tammy” and “Rich New” discussing submissions to
Bluevine, an SBA-authorized PPP lender, reveal this approach:
6 To be clear, the government is not seeking a ruling on the
admissibility of evidence with identities directly used in the PPP
or EIDL fraud and related transactions (the directly used
identities). Such evidence is already intrinsic to the charged
offenses and therefore not evidence of other acts. This includes
defendants’ communications in furtherance of the charged offenses.
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T.D. iPhone Excerpt 1 (May 1, 20207):
#
From
Body
2487 +17473334170 Rich New Go to bluevine.com right now and apply they are approving and
closing within 24 hours
2488 +18184145533 tammy
With same info
2489 +17473334170 Rich New Ya just change your EIN by one number
2490 +18184145533 tammy
Ohh and then they will come favk say they dint gave it
2491 +17473334170 Rich New I did 7 apps last night and 4 of them got email that it’s funded
2492 +18184145533 tammy
So I just change the last digit of tax I’d only while applying what
about when I have to uplaod
2493 +18184145533 tammy
940 941 keep it sane
2494 +17473334170 Rich New Ya change that too and give different account
2495 +17473334170 Rich New I didn’t sleep all night I was working 24 hours straight
2498 +18184145533 tammy
Wants statements
2499 +18184145533 tammy
February
2500 +18184145533 tammy
I don’t have that’s much activity there
2501 +18184145533 tammy
Should I upload
2502 +17473334170 Rich New So fix it
2503 +17473334170 Rich New Actually ya upload it
2504 +18184145533 tammy
Like fix it to match the payroll
Within minutes, the parties discussed how to obtain more
business EINs through password-protected databases and websites:
T.D. iPhone Excerpt 2 (May 1, 2020):
#
From
Body
2515 +17473334170 Rich New Tam is there any way we can get EIN number for business on Tlo
2516 +18184145533 tammy
Tax Id
2517 +17473334170 Rich New Ya
2518 +18184145533 tammy
Yah even with sole proprietor
2519 +17473334170 Rich New U serious
2520 +17473334170 Rich New How do I search
2521 +18184145533 tammy
Hesa I’ll send u
2522 +18184145533 tammy
But listen
2523 +18184145533 tammy
I have 4 total accounts 2 for abc 2 for secureline
2524 +18184145533 tammy
And Commerica is a smaller bank no than wells ? And they email
me to apply but I have no money in that account
7 Dates/Times are based on Coordinated Universal Time (UTC),
which is approximately eight hours ahead of Pacific Standard Time.
The columns show, from left to right, the internal number assigned
to the text message, the sender of the text, and its content.
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2525 +18184145533 tammy
rye925 - PIN
TLOxp Online
Reply HELP for help, Reply STOP to cancel.
Msg&data rates may apply.
2526 +17473334170 Rich New It doesn’t matter you can be running payroll from different
accounts
2527 +18184145533 tammy
So
Then why do I have to fix statements for
This idiot blue what ever
2528 +17473334170 Rich New You don’t I just did it anyway. They ask for statements to verify
your bank account
2532 +18184145533 tammy
[TAX ID ON JUST THE NAME.pdf]8
2533 +18184145533 tammy
https://irs-taxid-numbers.com/
2534 +17473334170 Rich New I don’t need to file I need to check
2537 +17473334170 Rich New Like I need the number
2538 +17473334170 Rich New I have the business name
2539 +18184145533 tammy
Ohhhhh Jesus u can call them if u have all their info
2540 +18184145533 tammy
Let me ask ara hold on
2541 +18184145533 tammy
Rich best way is to tlo the business name then call franchise tax
or wherever gives u the tax I’d say my cpa is not working I need
to verify my tax if
2542 +18184145533 tammy
Id
2543 +17473334170 Rich New Ya I did it didn’t show
2544 +18184145533 tammy
I’ll know morning from cpa
2545 +18184145533 tammy
Don’t forget send me the statement from ur payroll
2546 +17473334170 Rich New Use the bank statement I gave you for iuliia
2547 +17473334170 Rich New I gave you 3 months there is February in there. Use that
2548 +17473334170 Rich New The one I send you you is wells
2549 +17473334170 Rich New They don’t check for shit Tam. It’s all automated. They request
the statement to verify the account exists
Not only did “Rich New” expressly mention “iuliia,”
R. Ayvazyan’s alleged alias, the shared use of fraudulent payroll
records created using preexisting synthetic identities and accounts
is further evidence of the conspiracy. Defendants R. Ayvazyan and
T. Dadyan shared such information with the other defendants, as
well. For example, the government intends to prove at trial that
8 The names of images or files sent by text are identified in
red bracketed font.
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fraudulent loan applications associated with defendants R. Ayvazyan,
Terabelian, T. Dadyan, and A. Ayvazyan: (1) reported the same
payroll and/or unemployment tax numbers, down to the penny; (2) used
the same types of fraudulent payroll reports and/or federal tax
forms as fraudulent loan applications associated with defendants
Manuk Grigoryan, Edvard Paronyan, and Vahe Dadyan; and (3) sought
the same amounts from the same banks around the same time period,
and then shared the proceeds. Such coordination is the hallmark of
conspiracy.
Defendants’ reliance on pre-existing accounts to develop
fraudulent PPP or EIDL applications was not limited to business
identities. As shown below, they also drew from a preexisting
supply of individual identities, including those of the dead, to
meet lender criteria. Exchanges like the below demonstrate that
defendants viewed these many identities as fungible:
T.D. iPhone Excerpt 3 (May 28, 2020):
#
From
Body
2943 +17473334170 Rich New Btw I got one today on a personal account
2944 +18184145533 tammy
From ? Bluevibe ?
2945 +17473334170 Rich New No from Liberty SBF to a guys US bank personal
2946 +18184145533 tammy
How long it took
2947 +18184145533 tammy
I have 3 million ending with bluevine no response
2948 +18184145533 tammy
Since 5/8 I reapplied Nd still nothing
2949 +17473334170 Rich New This one took probably 2 weeks
2950 +18184145533 tammy
[2019 Form 940 TQ.pdf]
2951 +18184145533 tammy
[Form 941 (Rev. January 2019)TQ.pdf]
2952 +18184145533 tammy
Is this a dude’s face one u used
2953 +18184145533 tammy
I didn’t use this one the one I have is the same one this guy
changed the numbers on I don’t want to give all same exact
numbers
2954 +17473334170 Rich New Ya don’t use all same
2955 +17473334170 Rich New I have like 3 different ones
2956 +18184145533 tammy
On that one what’s the payroll amount
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2957 +17473334170 Rich New But honestly I’m not doing those anymore. The getting hard to
do now
2958 +17473334170 Rich New That one is like 180k loan
2959 +17473334170 Rich New I applied yesterday
2960 +18184145533 tammy
Should I redo this so with osbaldo or alak name then do it ?
[IMG_5307.PNG] [IMG_5308.PNG]
2961 +17473334170 Rich New Ya but this is credit based remember. Put it on someone that has
at least like 640 fico
2962 +18184145533 tammy
I have alak
2963 +18184145533 tammy
High fico
2964 +18184145533 tammy
I think
2965 +17473334170 Rich New Call me
2966 +18184145533 tammy
[Credit sesame printscreen.jpg]
2967 +17473334170 Rich New Your good
2968 +18184145533 tammy
That’s alak not me 😂😂
2969 +17473334170 Rich New You can do 2 on this guy
2970 +18184145533 tammy
Let’s go the fool is dead on armo land
2971 +17473334170 Rich New Ok he has personal accounts?
2972 +18184145533 tammy
Yes wells
2973 +18184145533 tammy
Can’t u check see if rojellio account open wut is we have his
account checks here from us bank
Furthermore, as indicated in the last message above, defendants
used checks, check images, and bank statements in their possession
to help transfer funds as part of the overall scheme and conspiracy.
Defendants used check images to help wire money to coconspirators
after an account received PPP or EIDL funds. (See T.D. iPhone
Excerpts 7 and 8, infra at 18-20; see also Exh. 1 and 4 (filed under
seal).) Defendants even discussed how to print checks, when needed:
T.D. iPhone Excerpt 4 (July 28, 2020):
#
From
Body
3986 +18184145533 tammy
Rich u have a check from this
[Fw Welcome to the Brighter Side of Banking.png]
3987 +17473334170 Rich New Who’s is that
3988 +18184145533 tammy
Some one I did but I need to make a voided check
3989 +18184145533 tammy
I don’t have any I’ll look in my office but If you find a check can u
send me pic
3990 +17473334170 Rich New Go to checkkeeper.com. Put the info and print one
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Evidence found during the residential searches includes checks
printed on the wrong side of check paper. (See Exh. 1 at 2.)
The seized evidence from T. Dadyan and A. Ayvazyan’s residence
also includes notary stamps and seals that were located in the same
room as fake identification documents, credit and debit cards,
fraudulent loan applications, and checks and checkbooks. As with so
many of the other instruments of fraud found at defendants’ houses,
these notary stamps displayed names other than those of defendants.
Two of these names were used in fraudulent PPP or EIDL applications.
This includes a Bank of America PPP application for $117,938
submitted by “Arsen Dadyan,”9 the supposed business representative of
ABC Realty Advisors, Inc., with a supposed average monthly payroll
of $49,135.25 -- despite having no records of relevant IRS tax
filings in 2019.
Notary stamps and seals are used to indicate authenticity; they
verify the validity of a transaction or a public record that may be
relied on by third-parties. The T.D. iPhone messages reveal the
importance of using businesses with an ostensibly clean record. The
messages below show how the coconspirators reacted when it was
discovered that Secureline Realty and Funding, Inc. – a company that
T. Dadyan is alleged to have used to submit fraudulent PPP loans
(FSI ¶ 33 (Overt Acts 8-16)) - had been suspended by the Secretary
of State (“SOS”):
T.D. iPhone Excerpt 5 (August 4, 2020):
#
From
Body
4097 +17473334170 Rich New Tam what’s the password for Tlo
4098 +18184145533 tammy
Not working hold on
9 This application was produced to defense as Bates no.
DOJ_PROD_000000005.pdf - DOJ_PROD_000000007.pdf
Case 2:20-cr-00579-SVW Document 384 Filed 05/31/21 Page 17 of 29 Page ID
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4099 +17473334170 Rich New I put Arturo2020$
4100 +17473334170 Rich New But it’s not working
4101 +18184145533 tammy
It’s not babe they found Secureline sos suspended
4102 +17473334170 Rich New U serious, so we can’t run TLO
4103 +18184145533 tammy
U have a payroll report redacted or not for 11 people
4104 +17473334170 Rich New Whatever I have you have aziz
The evidence shows that the coconspirators understood that
lenders and retail banks required official-looking records to verify
the coconspirators’ relationship to a business, particularly when
opening bank accounts. So the coconspirators created them. On or
about September 16, 2020, “tammy” texted “Rich New” that a check she
had written from Bank of the West to “abc really” [sic] was rejected
and she had been on hold 60 minutes. She then described providing
altered documentation of ownership to open an account at a new bank:
T.D. iPhone Excerpt 6 (Sept. 16-17, 2020):
#
From
Body
4708 +18184145533 tammy
His emailing me the one now am and am financial
4709 +18184145533 tammy
U get this he opened the account with my name
4710 +18184145533 tammy
But the Corp online everything belongs to Alak
4711 +18184145533 tammy
Public record no where me
4712 +17473334170 Rich New So you just gave the articles?
4713 +18184145533 tammy
Nope I did stock purchase agreement
4714 +18184145533 tammy
And the papers showing I changed online the statement of info
but I didn’t
4715 +18184145533 tammy
It’s only printout
4716 +18184145533 tammy
And email from them says ur email received allow 72 hours or
something to update
4721 +18184145533 tammy
Rich I Have the other ones
4722 +18184145533 tammy
U want to check
4723 +18184145533 tammy
The shit load I gave u befor to old cell
4724 +18184145533 tammy
Should I email
4725 +18184145533 tammy
Rich is my
4726 +18184145533 tammy
I opened 3 accounts
The above conversation is an explicit example of how, when one
account or identity can no longer be used, the coconspirators used
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preexisting business and individual identities to continue the
fraud. This is because these identities are interchangeable. As
such, their possession of reserve identities and related instruments
of fraud (checks/checkbooks, email accounts, etc.) are inextricably
intertwined with the conspiracy.
The T.D. iPhone messages further reveal the coconspirators’
reliance on shared access to email accounts in the names of stolen
or synthetic identities to further the conspiracy. Not only were
emails useful for verifying new accounts, the mere existence of an
email account could help validate a false or stolen identity.
For example, on or about July 28, 2020, “tammy” and “Rich New”
discussed what supporting documentation to use for “LK Designs,” a
business purportedly owned by L.K. During that discussion, “tammy”
sent “Rich New” a modified payroll report bearing numerous names,
dates of birth, social security numbers, and associated email
accounts with the telling message, “See if better I fixed the
socials that were the same” (sic). (See Exh. 3 (filed under seal).)
As indicated by that message, the information contained in that
payroll report was fake, buft doctoring the information to create
the appearance of real people was key to executing the fraud scheme
and conspiracy.
b.
The Reserve Identity Evidence is Admissible
under Ninth Circuit Precedent
Under well-established Ninth Circuit precedent, offenses or
acts that form the basis of a conspiracy are “inextricably
intertwined” with that conspiracy and are therefore admissible,
without regard to Rule 404(b). See United States v. Montgomery, 384
F.3d 1050, 1061–62 (9th Cir. 2004) (summary exhibit admissible
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because it detailed acts that were inextricably intertwined with the
conspiracy) (citing United States v. Williams, 989 F.2d 1061 (9th
Cir. 1993), United States v. Lillard, 354 F.3d 850 (9th Cir.2003),
and United States v. Vizcarra–Martinez, 66 F.3d 1006, 1012 (9th Cir.
1995)). As described above, defendants’ possession of reserve
identities and their related instruments of fraud is inextricably
intertwined with the charged conspiracy and schemes. They each form
a part of the synthetic identity assembly line that enabled
defendants to conspire to, and commit, PPP and EIDL fraud. It
further enabled them to access and/or open accounts necessary to
receive and transfer the proceeds of that fraud. This is true even
if the evidence relates to specific names that were not directly
used in PPP or EIDL applications because it is proof of the manner
and means of the conspiracy, the relationship between the
coconspirators, and their respective roles in that conspiracy.
Such evidence would be admissible even when analyzed through
the lens of a charged fraud scheme, rather than a fraud conspiracy.
In United States v. Loftis, the Ninth Circuit applied the concept of
inextricably intertwined evidence to wire fraud. 843 F.3d 1173,
1177 (9th Cir. 2016). Before trial, the government indicated its
intent to present evidence from investor victims, wires, and
geographic locations that were not specifically referenced in the
indictment. Id. at 1175-76. The district court partially granted
defendant’s motion to exclude on the basis that these were “other
wire frauds” not charged in the indictment. Id. at 1175-76. The
Ninth Circuit reversed, extending to wire fraud the principle that
“direct evidence of the ongoing conspiracy charged in the
indictment” was not subject to Rule 404(b). Id. at 1176-77.
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Instead, the Ninth Circuit pointed to its holding in United States
v. Lo, 839 F.3d 777, 793 (9th Cir. 2016), to state that since the
commission of wire fraud “necessarily includes a fraudulent scheme
as a whole,” the additional evidence simply encompassed “additional
executions of the scheme that were not specifically charged.” The
government was not precluded from “introducing evidence of uncharged
transactions to prove the first element of wire fraud—the existence
of a scheme to defraud.” Loftis, 843 F.3d at 1176-77.
Similarly, defendants’ possession of the seized evidence is
encompassed in the charged fraud schemes and conspiracy. The
colocation of evidence with directly used and reserve identities
shows they were all part of the coconspirator’s approach to
manufacturing the evidence necessary to commit the charged offenses.
It proves the first element of wire fraud – the existence of the
coconspirators’ scheme to defraud by using an assembly line of false
and synthetic identities, businesses, supporting records and
certifying tools, and their access to related financial and online
accounts. The products of this assembly line were used in
furtherance of their conspiracy to obtain COVID-19 disaster relief
funds for their own personal expenses.
2.
The Reserve Evidence is Inextricably Intertwined with
the Money Laundering Conspiracy and Scheme
Defendants are also charged with money laundering and money
laundering conspiracy. Specifically, they are charged with, among
other things, conducting and attempting to conduct financial
transactions involving the proceeds of the wire fraud and bank fraud
conspiracy; namely, the fraudulent proceeds of the PPP and EIDL
applications described above. (See FSI ¶¶ 51-58.) As such,
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evidence inextricably intertwined with the fraud and fraud
conspiracy must also form an inextricably intertwined basis for the
money laundering charges.
The seized evidence is also admissible to prove the alleged
money laundering offenses, separate and apart from the money
laundering conspiracy’s dependence on the EIDL and PPP fraud. The
government found checks, checkbooks, credit and debit cards and
other financial records during the November 2020 residential
searches. Photographs of checks, checkbooks, and credit and debit
cards were also sent between coconspirators in text messages found
on the T.D. iPhone. The text messages reveal that checks and
account records were not only used to support fraudulent PPP and
EIDL applications; photos of these documents were used to direct the
receipt and transfer of the fraudulent proceeds in furtherance of
the charged offenses to pay individual coconspirators. (FSI ¶ 53.)
For example, bank records show that on or about July 3, 2021, a
New Acre Farm Produce account in the name of T.T. received $210,000
from “Crb Bluevine Sba Loan.”10 That same day, “tammy” sent “Rich
New” a photo of the Runyan Tax Bank 2 account statement (see Exh. 4
at 1 (filed under seal)) with the following message:
T.D. iPhone Excerpt 7 (July 3, 2020):
#
From
Body
3504 +18184145533 tammy
I’m expecting a wire for Art for $73500
[IMG_5861.jpg] (See Exh. 4 at 1.)
3505 +18184145533 tammy
And for me $157
3506 +18184145533 tammy
How many times can people apple for the sister relief I feel like
u can apply with different emails and different information
3507 +17473334170 Rich New As many businesses as you have with different eins
10 Law enforcement agents found pre-signed copies of New Acre
Farm Produce checks in T. Dadyan and A. Ayvazyan’s residence. (See
Fenton Decl. (ECF 207) Exh. 12.)
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3508 +17473334170 Rich New Sorry, I can't talk right now.
3509 +18184145533 tammy
Send me the routing number for the Vahe wire
3510 +18184145533 tammy
[IMG_2124.jpeg] (See Exh. 4 at 2.)
The last image sent by “tammy” in the above conversation was of
a wiring form showing the transfer of $73,500 from T.T. of New Acre
Farm Produce Inc. to Runyan Tax Service, Inc. (see Exh. 4 at 2).
The form identified “Payroll New Acre Farm Produce” as its purpose,
despite the text stating that the wire was expected for Art.
Notably, on the day before this wire “tammy” told “Rich New” that
someone was coming over and that, “I told art show him the decline
letter from the eidl and it’s simple its 35 percent for ppp.” The
$73,500 “wire for Art” is 35% of the $210,000 in SBA funds that had
been deposited into the New Acre account. Bank records confirm that
the wire was sent and received.
A similar discussion occurred on July 10, 2020, in which the
parties sent images of checks to identify which accounts to use for
wires and further discussed using checks as an alternative method by
which the money could be transferred through “Art” (defendant
T. Dadyan’s husband and co-defendant is Artur Ayvazyan). (See T.D.
iPhone Excerpt 8, below.)
T.D. iPhone Excerpt 8 (July 10, 2020):
#
From
Body
3639 +17473334170 Rich New Oh ok. I wanna wire now
3640 +17473334170 Rich New For Vahe
3641 +18184145533 tammy
Ok ڐ
ڑ
ڒ
3642 +18184145533 tammy
U have info
3643 +17473334170 Rich New It’s that check right u send me
3644 +18184145533 tammy
[IMG_6569.jpeg]
3645 +17473334170 Rich New This one
[IMG_6512.jpg] (See Exh. 4 at 3.)
3646 +18184145533 tammy
I
3647 +17473334170 Rich New What email should I put for him
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3648 +18184145533 tammy
Vahe314@yahoo.com
3649 +17473334170 Rich New It allows me only 25. So I sent 25
3650 +17473334170 Rich New Do you want me to send from other place or he can wait we can
send another 25 Monday
3651 +18184145533 tammy
Ok Monday or u can give check art will deport for him
3652 +18184145533 tammy
Or what’s ever
3653 +17473334170 Rich New Ok
Vahe Dadyan is a charged coconspirator who, among other things,
is alleged to have submitted a fraudulent PPP loan that caused
$157,000 in fraudulent proceeds to be deposited into an account,
from which approximately $155,000 was transferred into the Runyan
Tax Bank 2 account. (FSI ¶ 33 (Overt Acts 37 – 40).) This transfer
occurred on or about July 3, 2020. (Id.) On or about July 23,
2020, funds in the Runyan Tax Bank 2 Account were transferred to
Escrow Company 2 to help purchase Residential Property 2 in the name
of defendant R. Ayvazyan’s alleged alias, “Iulia Zhadko.” (FSI ¶ 33
(Overt Act 41).)
As these messages show, the coconspirators used a ready supply
of financial accounts, including preexisting accounts owned or
controlled by other members of the conspiracy, to send, receive, or
cause the sending or receiving of funds, as needed. Like the
identities used to fraudulently apply for PPP and EIDL loans, the
bank accounts used to launder the proceeds were also fungible. When
one method of payment failed, they moved to another. When one
account could no longer be used, they opened a new one using a
synthetic identity. (See T.D. iPhone Excerpt 6, infra at 14-15.)
As such, evidence of defendants’ possession, control, and access to
reserve identities and the tools necessary to verify them is
inextricably intertwined with the money laundering conspiracy.
Without the ability to create and support these synthetic
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identities, the coconspirators would not have been able to access,
open, or otherwise control the accounts through which the tainted
funds flowed.
3.
The Approximately $450,000 in Cash Found at
R. Ayvazyan and Terabelian’s Residence Is Admissible
In Loftis, the Ninth Circuit relied on its prior precedent in
United States v. Dorsey, 677 F.3d 944 (9th Cir. 2012), to highlight
“two general categories of other act evidence [that] may be
inextricably intertwined and thus exempted from the requirements of
Rule 404(b). First, other act evidence may constitute a part of the
transaction that serves as the basis for the criminal charge.
Second, admission of the other act evidence may be necessary to
permit the prosecutor to offer a coherent and comprehensible story
regarding the commission of the crime.” Loftis, 843 F.3d at 1177-78
(internal quotations and citations omitted).
The cash found at defendant R. Ayvazyan and Terabelian’s
residence is inextricably intertwined with the charged fraud scheme
and conspiracy. The primary purpose of financial fraud is not the
fraud itself; it is the money. Bank records show that, in addition
to moving fraudulently obtained PPP and EIDL funds through the use
of wires and checks, defendants also took possession of money from
tainted accounts in cash. (See Fenton Decl. (ECF 188), Exh. 8 and
15 (showing numerous checks made out to “CASH” using the Mod
Interiors Bank 7 account); see also FSI ¶¶ 22(d), 23(c), and 33
(Overt Acts 54-58).) As such, the presence of nearly half-a-million
dollars in cash on defendants R. Ayvazyan’s and Terabelian’s
property is part and parcel of the story of their criminal conduct.
Money is the purpose for the fraudulent transactions discussed
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above, and defendants’ possession of significant amounts of bundled
cash – particularly when found hidden in the bushes of their
property during the search - permits the government to present the
jury with a complete story of the charged offenses and prove its
case. (See Fenton Decl. (ECF 188), Exh. 8.) Similarly, the bundled
stacks of cash are inextricably intertwined with the charged money
laundering conspiracy. Cash is the ultimate fungible asset --
unlike wire or bank-based transfers, it can exchange hands numerous
times without leaving an audit trail.
B.
The Reserve Evidence Is Inextricably Intertwined with the
Charged Offenses Even If They Could be Used for Other,
Uncharged Crimes
It is possible that defendants used the above-described
instruments of fraud and money laundering to pursue other crimes.
Defendants have also been charged by the California Attorney
General’s Office with a years-long mortgage fraud scheme and
defendants R. Ayvazyan and Terabelian were previously convicted in
this district for a loan-related bank fraud scheme. (See ECF 334,
340, and 357.) However, as indicated by the Ninth Circuit’s ruling
in United States v. Daly, the mere fact that an instrument of crime
can be used to commit other crimes does not subject it to Rule
404(b). 974 F.2d 1215, 1216 (9th Cir. 1992) (government permitted
to present inextricably intertwined evidence of shoot-out during
which defendant possessed a firearm to prove felon-in-possession
charge).
The use of a check, fake social security number, or a dead
person’s identity for multiple types of fraud does not remove its
inextricable connection to the charged offense, just as the
commingling of funds does not remove the taint of unlawful activity.
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See United States v. Ward, 197 F.3d 1076, 1083 (11th Cir. 1999). It
would be nonsensical for defendants to exclude evidence of the
manner and means by which they committed fraud and money laundering
simply by using them to commit additional, uncharged crimes. The
Ninth Circuit recognized this reality in United States v. Williams,
when it affirmed the district court’s decision to admit evidence of
defendant’s sale of drugs other than the charged cocaine. 989 F.2d
1061, 1071 (9th Cir. 1993). “The policies underlying rule 404(b)
are inapplicable when offenses committed as part of a single
criminal episode become other acts simply because the defendant is
indicted for less than all of his actions.” Id.
C.
Even if Rule 404(b) Applied, the Evidence Would be
Admissible
As discussed above, the government does not believe evidence of
defendants’ possession of reserve identities and related instruments
of fraud fall under the scope of Rule 404(b) because they are
inextricably intertwined with the charged conspiracies and schemes.
However, even if Rule 404(b) did apply, the evidence would be
admissible as proof of opportunity, intent, preparation, plan,
knowledge, identity, absence of mistake, and lack of accident. For
the reasons presented, defendants’ possession of, and access to, a
ready supply of individual and business information, combined with
the tools to manufacture and verify synthetic identities, enabled
them to commit the charged crimes. Defendants’ possession of these
instruments of fraud and money laundering reveal that their receipt
of fraudulent PPP and EIDL proceeds was no accident. It was all
part of a deliberate plan to submit fraudulent loan applications and
enjoy the fruits of their labor by using the tools they had before,
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and further developed during, the COVID-19 pandemic.
The Ninth Circuit has repeatedly held that “Rule 404(b) is one
of inclusion--not exclusion[.]” See e.g., United States v. Lague,
971 F.3d 1032, 1040 (9th Cir. 2020) and United States v. Bailey, 696
F.3d 794, 806 (9th Cir. 2012). Under the Ninth Circuit’s “low
threshold test of sufficiency,” defendants’ possession of additional
fictitious and synthetic identities and the instruments of fraud are
admissible for purposes of proving opportunity, intent, preparation,
plan, knowledge, identity, absence of mistake, and lack of accident.
Lague, 971 F.3d at 1040 (citations and quotations omitted).
In Lague, the Ninth Circuit held that the district court
properly admitted evidence of a medical professional’s “uncharged
prescriptions of controlled substances in enormous quantities”
because they supported a “reasonable inference” that the charged
controlled substance prescriptions were issued unlawfully. Id.
Similarly, defendants’ possession of synthetic identities in names
that were directly used in fraudulent loan applications and related
accounts, as well as those that were not, combined with their
possession of the instruments of fraud (stamps, seals, account
passwords, checks, credit and debit cards in names not their own),
all support a reasonable inference that defendants knowingly and
intentionally used synthetic identities in furtherance of the
charged offenses. As such, the evidence is admissible under the low
threshold requirements of Rule 404(b).
IV.
CONCLUSION
For the aforementioned reasons, evidence of defendants’
possession of and access to interchangeable reserve identities,
along with instruments of fraud directly referenced in coconspirator
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communications, is admissible as being inextricably intwined with
the charged fraud and money laundering conspiracies and schemes.
The government respectfully requests that the Court find such
evidence admissible as inextricably intertwined with the charged
offenses or, in the alternative, admissible under the permissive
standards of Rule 404(b).
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