REPLY In Support of NOTICE OF MOTION AND MOTION for Order for MOTION TO REDACT… — USA v. Ayvazyan et al (Dkt. 450)

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The government's reply to the defendants' opposition to its motion to redact the superseding indictment (ECF 422), in United States v. Ayvazyan et al., No. CR 20-579(A)-SVW (C.D. Cal.), Document 450, filed 06/08/21. It would remove paragraph 32, which alleges at least $21.9 million in PPP and EIDL proceeds sought and at least $18 million received, because the government now plans evidence on only a subset of the 151 loans. It argues this is not a constructive amendment because the paragraph does not state an essential element, and says proof of the full scope of a conspiracy is allowed. It also opposes the defendants' motion to strike paragraphs 10-18, which describe the PPP and EIDL programs, as relevant background.

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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 
 
REPLY TO DEFENDANTS’ OPPOSITION TO 
GOVERNMENT’S MOTION TO REDACT 
SUPERSEDING INDICTMENT 
 
 
 
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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 reply in support of 
the government’s motion to redact the superseding indictment for use 
at trial (ECF 422).   
This reply is based upon the attached memorandum of points and 
authorities, the files and records in this case, and such further 
evidence and argument as the Court may permit. 
Dated: June 8, 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 
 
 
 
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MEMORANDUM OF POINTS AND AUTHORITIES 
I. 
INTRODUCTION 
The government hereby submits this reply to defendants’ 
opposition to its motion to redact the superseding indictment. 
As set forth below, the government’s motion to redact the 
superseding indictment’s reference to 151 loans would not cause 
a constructive amendment.  Moreover, defendants’ motion to 
strike from the superseding indictment the description of the 
Paycheck Protection Program (PPP) and Economic Injury Disaster 
Loan (EIDL) programs should be denied because this information 
is clearly relevant to the charges.   
I. 
STRIKING PARAGRAPH 32 WOULD NOT CAUSE A CONSTRUCTIVE 
AMENDMENT BECAUSE THOSE ALLEGATIONS ARE NOT ESSENTIAL 
ELEMENTS OF THE CRIMES CHARGED.   
 
Paragraph 32 of the superseding indictment says, in 
pertinent part, that the conspirators submitted and caused the 
submission of “at least $21.9 million in PPP and EIDL proceeds 
from the SBA and at least 11 financial institutions, and 
received a total of at least $18 million in PPP and EIDL loan 
proceeds from the SBA and financial institutions.”  On June 4, 
2021, the government, having heard no objection from the 
defense, moved to redact this paragraph from the indictment.  
(ECF No. 422.)   
In their opposition, defendants hypothesize that the 
government sought these redactions in response to their 
submission of a proposed multiple conspiracies jury instruction.  
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(ECF. No. 426 at 4.)  While it is unclear why paragraph 32 and 
the proposed jury instruction are related, defendants’ 
supposition misses the mark.  In fact, as the government made 
clear in its motion, the proposed redactions reflect the 
government’s efforts to streamline its case.  The government now 
intends to present evidence relating to only a subset of the 151 
loans identified in paragraph 32 of the indictment.  Hence, 
reading paragraph 32 to the jury would have the effect of 
referencing a greater number of loans than the government 
intends to present evidence on.   
The proposed redactions to paragraph 32 will have the added 
benefit of simplifying the post-trial Kastigar hearing.  
Defendants have previously asserted that they intend to 
demonstrate that “at least 83” of the 151 loans were “tainted” 
by compelled testimony.  (ECF No. 381 at 5.)  To avoid any 
doubt, the government can prove that it obtained the indictments 
using evidence from sources independent of the statements that 
the court found to be compelled.  Accordingly, there was no 
Kastigar violation.1  In any event, redacting paragraph 32 will 
streamline the Kastigar hearing by putting in issue at trial 
 
1 While excising paragraph 32 will unquestionably streamline 
the Kastigar hearing, the government does not concede that 
merely reading paragraph 32 to the jury imposes a burden to 
identify an independent source for all 151 loans.   
 
 
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only the subset of loans that the government plans to present to 
the jury, not each of the 151 loans mentioned in the indictment.   
At any rate, the government’s motivations for seeking the 
redaction have no bearing on whether a constructive amendment 
would occur.  See United States v. Ward, 747 F.3d 1184, 1191 
(9th Cir. 2014) (constructive amendment occurs when the 
defendant could be convicted of a crime not charged in the 
indictment).  There are two types of constructive amendments.  
First, “where there is a complex of facts presented at trial 
distinctly different from those set forth in the charging 
instrument” and “second, where the crime charged in the 
indictment was substantially altered at trial so it was 
impossible to know whether the grand jury would have indicted 
for the crime actually proved.”  United States v. Davis, 854 
F.3d 601, 603 (9th Cir. 2017).  A constructive amendment occurs 
only when the change at issue pertains to an “essential element” 
of the crime charged.  United States v. Hartz, 458 F.3d 1011, 
1021 (9th Cir. 2006) (indictment language describing particular 
firearm used as part of a crime of violence did not go to the 
“essential elements” of the offense) (collecting cases).   
Proving the falsity of all 151 loans is not an “essential 
element” of any charged offense.  No charge in the indictment 
requires the government to prove the falsity of 151 loans.  For 
this reason, deleting paragraph 32 poses no danger that any 
defendant will be convicted of a crime for which he or she was 
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not charged.  Indeed, the essential character of the schemes and 
conspiracies alleged in the indictment are expressed in the 
“objects” and “manner and means” paragraphs of the charging 
instrument and this language would not be changed by the 
government’s proposed redactions.  (See e.g., ECF 154 ⁋⁋ 30, 31, 
39, 40, and 53.)   
Defendants argue that United States v. Rakow, No. CR 04-
01563, 2006 WL 8445940 (C.D. Cal. June 30, 2006) presented a 
similar issue.  But in that case, the government stipulated to 
prejudice and admitted that it sought to strike portions of an 
indictment that it could not prove. Id. at *3.  Here, the 
government’s motivations for moving to strike are unrelated to 
the merits of the case.  Moreover, the district court in Rakow 
performed no analysis of whether the language at issue went to 
an “essential element,” which is a precondition for establishing 
a constructive amendment.     
The defendant’s argument to exclude the government’s 
summary charts overlooks the fact that the government may 
present evidence of a conspiracy that is not charged as a 
substantive count.2  (ECF No. 426 at 10.)  Specifically, 
 
2 The summary chart exhibits served by the government 
identified around 60 loans.  The defendants had adequate notice 
that each of these loans were at issue because, with the 
exception of one loan that was inadvertently included in the 
summary chart exhibits, these loans are a subset of the 151 
loans referenced in paragraph 32 of the indictment and on May 
(footnote cont’d on next page) 
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defendants argue that the deletion of paragraph 32 would leave 
“only the seventeen loans charged in the overt acts and the wire 
and bank fraud counts of the indictment.  Yet the proposed 
summary charts shared by the government include at least 60 
other PPP and EIDL loan applications that are not charged in the 
indictment.”  (ECF No. 426 at 9).  The fact that the government 
proposes to introduce evidence of loans that are not charged as 
substantive counts is not a problem.  Fraudulent loans that were 
not alleged as substantive counts are nevertheless probative of 
the conspiracy.  In United States v. Rizk, a mortgage fraud 
case, the Ninth Circuit affirmed the district court’s ruling 
allowing the government to submit summary chart exhibits that 
described mortgage loans that were not specifically alleged in 
the indictment.  660 F.3d 1125, 1131 (9th Cir. 2011).  In doing 
so, the panel held that “[t]he rule is well established that the 
government in a conspiracy case may submit proof of the full 
scope of the conspiracy; it is not limited in its proof to overt 
acts alleged in the indictment.”  Id.  Rizk is on all fours and 
resolves this issue in the government’s favor.    
 
 
     
 
21, 2021, the government provided the defense with notice of all 
151 loans.    
 
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II. 
DEFENDANTS’ MOTION TO STRIKE PARAGRAPHS 10-18 OF THE 
SUPERSEDING INDICTMENT SHOULD BE DENIED BECAUSE THESE 
ALLEGATIONS PERTAIN TO PROGRAMMATIC BACKGROUND 
   
The defendants move to strike as unfairly prejudicial 
paragraphs 10-18 of the indictment, which describe the 
background of the PPP and EIDL programs.  (ECF No. 426 at 10.)  
“The purpose of a motion to strike under Fed. R. Crim P. 7(d) is 
to protect a defendant against prejudicial or inflammatory 
allegations that are neither relevant nor material to the 
charges.”  United States v. Terrigno, 838 F.2d 371, 373 (9th 
Cir. 1988).  Even prejudicial language should not be stricken if 
it is relevant to the charges.  United States v. Scarpa, 913 
F.2d 993, 1013 (2d Cir. 1990) (“if the evidence of the 
allegation is admissible and relevant to the charges, then 
regardless of how prejudicial the language is, it may not be 
stricken”). 
The defendants do not argue that paragraphs 10-18 are 
irrelevant, nor can they.  This is a case about fraud on the PPP 
and EIDL programs and the language at issue describes those 
programs.  The relevance is clear and the court should deny the 
motion on that basis alone.   
In any event, the allegations in paragraphs 10-18 are not 
prejudicial.  The allegations in these paragraphs merely 
describe programmatic background and are innocuous.  It is 
difficult to understand how reading these allegations to the 
jury would cause unfair prejudice given that 1) the jury will be 
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instructed that the allegations in the indictment are not 
evidence; and 2) the government will call program witnesses to 
provide the same information.  Indeed, juries are regularly 
called upon to decide cases involving all manner of fraud on 
public programs – including Medicare fraud, defense procurement 
fraud, and tax evasion – and COVID relief programs are no 
different.  See United States v. Bergman, 813 F.2d 1027, 1029 
(9th Cir. 1987) (government’s characterization of defendant as a 
“tax protester” was not unfairly prejudicial).  While the 
government plans to offer evidence that PPP and EIDL are 
publicly-funded programs, it has no intention to argue to jurors 
that they have a personal financial stake in the case.   
Finally, defendants allege that paragraph 11 of the indictment 
misstates the law by alleging “that breaking the PPP lending 
agreement (i.e., breaching a contract) could cause the federal 
government to pursue criminal charges.”  It is difficult to 
understand how one could interpret paragraph 11 as making that 
allegation.  The superseding indictment alleges that the defendants 
committed fraud and other criminal offenses.  That those offenses may 
also constitute breaches of contract is neither here nor there 
because the court will not instruct the jury that breaching a 
contract is a crime.          
 
  
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