Court filing
GOVERNMENT'S SUPPLEMENTAL SENTENCING STATEMENT ON RESTITUTION AND FORFEITURE FOR… — USA v. Ayvazyan et al (Dkt. 1165)
Filed November 24, 2021 in USA v. Ayvazyan et al; one of 233 filings from this case.
Record facts
| Court | U.S. District Court for the Central District of California |
|---|---|
| Filed | 2021-11-24 |
U.S. District Court for the Central District of California · No. 2:20-cr-00579-SVW · Doc. 1165 · 2021-11-24 · Docket on CourtListener
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TRACY L. WILKISON
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
JOSEPH S. BEEMSTERBOER
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,”,
Defendants.
No. CR 20-579(A)-SVW-1-2-3
GOVERNMENT’S SUPPLEMENTAL
SENTENCING STATEMENT ON
RESTITUTION AND FORFEITURE FOR
DEFENDANTS RICHARD AYVAZYAN,
MARIETTA TERABELIAN, AND ARTUR
AYVAYZAN; MEMORANDUM OF POINTS AND
AUTHORITIES
Hearing Date: December 6, 2021
Hearing Time: 11:00 a.m.
Location:
Courtroom of the
Hon. Stephen V.
Wilson
Case 2:20-cr-00579-SVW Document 1165 Filed 11/24/21 Page 1 of 26 Page ID
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Plaintiff United States of America, by and through its counsel
of record, the United States Attorney for the Central District of
California and Assistant United States Attorneys Scott Paetty,
Catherine Ahn, and Brian Faerstein, and Department of Justice Trial
Attorney Christopher Fenton, hereby files its supplemental statement
on restitution and forfeiture for defendants Richard Ayvazyan,
Marietta Terabelian, and Artur Ayvazyan.
This statement 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: November 24, 2021
Respectfully submitted,
TRACY L. WILKISON
United States Attorney
SCOTT M. GARRINGER
Assistant United States Attorney
Chief, Criminal Division
/s/
SCOTT PAETTY
CATHERINE AHN
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 1165 Filed 11/24/21 Page 2 of 26 Page ID
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TABLE OF CONTENTS
DESCRIPTION
PAGE
MEMORANDUM OF POINTS AND AUTHORITIES................................1
I.
INTRODUCTION...................................................1
II.
RESTITUTION....................................................4
A.
The Law of Restitution....................................4
B.
Restitution Must Be Ordered for Losses Incurred by the
Victim Lenders as a Result of the Conspiracy..............7
III. FORFEITURE....................................................10
A.
The Court Should Deny Defendant R. Ayvazyan’s Request
to Modify the Court’s Money Judgment of Forfeiture.......10
1.
The Money Judgment Property Discounted Specific
Forfeited Assets ....................................11
2.
The Money Judgment Property Reflects Tainted Funds
that Came to Rest in Accounts R. Ayvazyan
Controlled ..........................................19
IV.
CONCLUSION....................................................21
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TABLE OF AUTHORITIES
DESCRIPTION
PAGE
Federal Cases
Honeycutt v. United States,
137 S. Ct. 1626 (2017) .............................................. 16
Kaley v. United States,
571 U.S. 320 (2014) ................................................. 17
Lagos v. United States,
138 S. Ct. 1684 (2018) ............................................... 6
Paroline v. United States,
572 U.S. 434 (2014) .................................................. 5
Robers v. United States,
134 S. Ct. 1854 (2014) ............................................... 5
United States v. Bailey,
973 F.3d 548 (6th Cir. 2020) ....................................... 6-7
United States v. Gamma Tech Indus., Inc.,
265 F.3d 917 (9th Cir. 2011) ......................................... 5
United States v. Gordon,
393 F.3d 1044 (9th Cir. 2004) ..................................... 6, 8
United States v. Gossi,
608 F.3d 574 (9th Cir. 2010) ...................................... 6, 9
United States v. Hackett,
311 F.3d 989 (9th Cir. 2002) ......................................... 6
United States v. Karie,
976 F.3d 800 (8th Cir. 2020) ......................................... 7
United States v. Morgan,
376 F.3d 1002 (9th Cir. 2004) ........................................ 7
United States v. Newman,
659 F.3d 1235 (9th Cir. 2011) ................................... 16, 17
United States v. Prasad, No. 19-10454,
2021 WL 5174096 (9th Cir. Nov. 8, 2021) ......................... 16, 17
United States v. Sullins,
529 Fed. App’x 584 (6th Cir. 2013) ................................... 7
United States v. Thompson,
990 F.3d 680 (9th Cir. 2021) ................................ 11, 12, 18
United States v. Yeung,
672 F.3d 594 (9th Cir. 2012) ......................................... 5
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TABLE OF AUTHORITIES (CONTINUED)
DESCRIPTION
PAGE
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Federal Statutes
18 U.S.C. 982 .......................................................... 15
18 U.S.C. § 3553 ........................................................ 4
18 U.S.C. § 3663 ..................................................... 4, 5
18 U.S.C. § 3664 .................................................. 4, 5, 7
18 U.S.C. § 3771 ........................................................ 4
Other Authorities
Fed. Crim. Rule. 32.2 .................................................. 11
Fed. R. Evid. 1101 ...................................................... 5
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MEMORANDUM OF POINTS AND AUTHORITIES
I.
INTRODUCTION
Defendants Richard Ayvazyan (“R. Ayvazyan”), Marietta Terabelian
(“Terabelian”), and Artur Ayvazyan (“A. Ayvazyan”) (collectively,
“defendants”) were convicted after a nine-day jury trial of numerous
crimes for their roles in what the Court described as a “raw” and
“horrendous” fraud scheme designed to steal millions of dollars from
COVID-19 relief programs. Defendants’ fraudulent scheme targeted and
stole loan proceeds otherwise earmarked for small businesses at the
height of the pandemic from the United States Small Business
Administration (the “SBA”) and numerous institutional lenders,
resulting in sustained losses of over $16 million with respect to R.
Ayvazyan and Terabelian and over $17 million with respect to A.
Ayvazyan.
Defendants were all convicted of conspiracy to commit wire fraud
and bank fraud, 11 counts of wire fraud, 8 counts of bank fraud, and
conspiracy to commit money laundering. R. Ayvazyan and A. Ayvazyan
also were convicted of aggravated identity theft (R. Ayvazyan was
convicted of two counts and A. Ayvazyan one count). At the
conclusion of trial, the jury made additional findings as to specific
property for which defendants’ interests should be forfeited as a
result of their convictions.
On November 15, 2021, the Court conducted sentencing hearings
for all three defendants.1 The Court sentenced R. Ayvazyan to 17
years in custody, five years of supervised release, and a fine of
$50,000. The Court applied a leader/organizer enhancement to R.
1 Defendants R. Ayvazyan and Terabelian are currently fugitives.
The Court sentenced them in absentia.
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Ayvazyan’s Guidelines calculations and described him as an “endemic,
cold-hearted fraudster” for whom fraud was a “way of life” and
something he viewed as an “achievement.”2 The Court noted that it
could not recall a fraud that was orchestrated and conducted in such
a “calloused, intentional way without any regard for the law” and
depicted R. Ayvazyan’s attitude as leader of the conspiracies as one
of “get as much as we can.”
The Court sentenced Terabelian to 6 years (72 months) in
custody, five years of supervised release, and a fine of $50,000.
The Court noted that Terabelian had a different role in the
conspiracy than her husband, R. Ayvazyan, but nonetheless recognized
that she was aware and supportive of the “family business” of fraud
and was not only R. Ayvazyan’s “partner in marriage” but also his
“partner in crime.” The Court further found that Terabelian enjoyed
the ill-gotten proceeds of the conspiracy, took active steps to
obstruct justice, and should be held accountable for the same amount
of restitution as R. Ayvazyan.
The Court sentenced A. Ayvazyan to five years in custody (60
months) to be followed by a five-year period of supervised release.
The Court did not impose a fine on A. Ayvazyan. The Court found that
A. Ayvazyan had perjured himself when he testified at trial and
denied his role in the fraudulent scheme. Moreover, the Court
rejected A. Ayvazyan’s attempts to distance himself from the vast
trove of evidence related to the fraud that was found at the
2 All quotations and citations related to the sentencing
hearings are based on the government’s notes and recollections. A
transcript of those proceedings has been ordered and the government
can supplement the record with the final transcript when it becomes
available.
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residence he shared with his wife, co-defendant Tamara Dadyan. The
Court similarly rejected A. Ayvazyan’s argument for a mitigating role
adjustment in the “horrific, calculated, and callous” fraud scheme
that targeted vulnerable relief programs at a critical time in this
country’s history.
At the sentencing hearings for all three defendants, the Court
found that the loss amounts associated with the fraudulent scheme
amounted to at least $1.5 million for purposes of the Sentencing
Guidelines offense level calculations, but the Court did not put an
upward limit on loss as to each defendant.3 The Court further stated
that, as part of its final judgment as to each defendant, it would
order restitution but left open the determination of these amounts
pending supplemental briefing by the parties. Separately, the Court
reserved decision on defendant R. Ayvazyan’s request to modify the
Court’s previously-entered Money Judgment of Forfeiture against him,
pending further briefing. The Court set a hearing on these matters
for three weeks from the date of the sentencing hearings, or December
6, 2021. The government thus submits this statement on restitution
3 For example, during the sentencing hearing for R. Ayvazyan,
the Court stated that it relied, among other things, on Government
Exhibit (“GEX”) 115 from trial and Exhibit 1 to the Declarations of
Catherine Ahn in support of the Government’s Sentencing Positions for
defendants in determining loss. The loss amount referenced in GEX
115 is $4,649,515, and, as discussed in more detail below, the loss
amounts in the exhibits attached to the government’s sentencing
positions were $16,464,071.26 (for defendants R. Ayvazyan and
Terabelian) and $17,723,141.26 (for defendant A. Ayvazyan). In
applying a loss level of more than $1.5 million for purposes of the
Guidelines calculation, the Court recognized that the government
might still be able to show even on clear and convincing evidence
(though the standard was preponderance of the evidence) that the loss
amount was more than $9.5 million. The Court later observed that,
with respect to the Guidelines loss amount, all it had to find was
“more than $1.5 million” but again did not put a cap on that finding.
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and forfeiture for defendants Richard Ayvazyan, Marietta Terabelian,
and Artur Ayvazyan.
II.
RESTITUTION
As described in more detail below, defendants should be held
accountable for restitution for the direct and proximate losses
sustained by the victim lenders (both the SBA and the individual
institutional lenders that suffered losses) as a result of the fraud
conspiracy for which all three defendants were convicted. The
government thus seeks restitution orders in the following amounts:
$16,464,071.26 (for defendants R. Ayvazyan and Terabelian) and
$17,723,141.26 (for defendant A. Ayvazyan).
A.
The Law of Restitution
Section 3553(a)(7) requires the Court, “in determining the
particular sentence to be imposed,” to consider “the need to provide
restitution to any victims of the offense.” 18 U.S.C. § 3553(a)(7).
Unlike loss calculations under the Sentencing Guidelines and
forfeiture, restitution owed to fraud victims is governed by statutes
specific to restitution, including the Mandatory Victims Restitution
Act of 1996 (“MVRA”), codified at 18 U.S.C. § 3663A.4 The MVRA
applies to defendants’ convictions in this case. (ECF 1121 (R.
Avyazyan PSR) ¶ 48; ECF 1125 (Terabelian PSR) ¶ 78; ECF 1128 (A.
Ayvazyan PSR) ¶ 76.)
Specifically, the MVRA requires a district court to order
restitution when (1) a defendant commits an “offense against property
under [Title 18] . . . including any offense committed by fraud or
4 Other statutes providing for restitution to victims are the
Victim and Witness Protection Act of 1982, codified at 18 U.S.C.
§§ 3663, 3664; and the Crime Victims’ Rights Act, codified at 18
U.S.C. § 3771.
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deceit,” and (2) there is an “identifiable victim” that has “suffered
a . . . pecuniary loss.” 18 U.S.C. § 3663A(a)(1), (c)(1). A victim
is “a person directly and proximately harmed as a result of the
commission of an offense for which restitution may be ordered.” 18
U.S.C. § 3663A(a)(2). The MVRA provides for “restitution to each
victim in the full amount of each victim’s losses,” and restitution
must be determined “without consideration of the economic
circumstances of the defendant.” 18 U.S.C. § 3664(f)(1)(A); 18
U.S.C. § 3663A(d) (a restitution order under Section 3663A “shall be
issued and enforced in accordance with section 3664”). The burden of
proof is on the government, by “the preponderance of the evidence,”
to “demonstrate[e] the amount of the loss sustained by a victim as a
result of the offense.” 18 U.S.C. 3664(e). The Court may rely on
hearsay in determining the proper amount of restitution. Fed. R.
Evid. 1101(d)(3); United States v. Yeung, 672 F.3d 594, 606 (9th Cir.
2012), abrogated on other grounds by Robers v. United States, 134 S.
Ct. 1854 (2014).
Proximate causation in the restitution context “is often
explicated in terms of foreseeability or the scope of the risk
created by the predicate conduct.” Paroline v. United States, 572
U.S. 434, 445 (2014). The fact that defendants acted with other co-
conspirators in causing the losses does not negate the fact that
these losses are appropriately attributable to defendants. Applying
a proximate-cause standard, the Ninth Circuit has “approved
restitution awards that included losses at least one step removed
from the offense conduct itself.” United States v. Gamma Tech
Indus., Inc., 265 F.3d 917, 928 (9th Cir. 2011). Indeed, so long as
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it is not “unreasonable,” a causal chain may have “multiple links.”
United States v. Hackett, 311 F.3d 989, 993 (9th Cir. 2002).
The Ninth Circuit has explained that “the advisory Sentencing
Guidelines and restitution to victims under the MVRA clearly focus on
different aspects of the offense and serve different purposes.”
United States v. Gossi, 608 F.3d 574, 582 (9th Cir. 2010).
“Restitution clearly focuses on the victim, not the individual
defendant. Restitution seeks to compensate the victim for all the
direct and proximate losses resulting from the defendant’s conduct,
not only for the reasonable foreseeable losses. The purpose of
restitution is to put the victim back in the position he or she would
have been but for the defendant’s criminal conduct.” Id. at 581
(rejecting defendant’s contention that court “should look to the
advisory Sentencing Guidelines for calculating the victim’s losses”)
(emphasis in original). See also United States v. Gordon, 393 F.3d
1044, 1052 n.6 (9th Cir. 2004) (“[T]he MVRA’s purpose is to make the
victims whole; conversely, the Sentencing Guidelines serve a punitive
purpose, necessitating a different loss calculation scheme than the
MVRA.”), abrogated on other grounds by Lagos v. United States, 138 S.
Ct. 1684 (2018).
Consistent with the MVRA’s focus on direct and proximate
causation and making victims whole, courts have recognized that the
amount of restitution under the MVRA need not be coextensive with the
loss amount used for purposes of calculating a fraud defendant’s
advisory Guidelines offense level. See, e.g., United States v.
Bailey, 973 F.3d 548, 576 (6th Cir. 2020) (affirming restitution
amount under MVRA even where loss may have been overcounted under
Guidelines, explaining that “[n]or is it incongruous to order an
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amount of restitution that reflects the loss caused by the entire
conspiracy, even while simultaneously finding an amount of loss that
reflects only conduct closely related to the defendant”); United
States v. Karie, 976 F.3d 800, 805-07 (8th Cir. 2020) (finding even
if district court erred in calculating loss for Guidelines offense
level purposes of $536,833.75, and a conservative Guidelines loss
estimate could only demonstrate the “loss amount was over $250,000,”
district court did not err in finding restitution of $536,833.75 was
owed under the MVRA); cf. United States v. Morgan, 376 F.3d 1002,
1014 (9th Cir. 2004) (affirming restitution order including
contractual interest and finance charges in fraud case even where
those amounts were found to be improperly counted in the loss amount
for purposes of the Guidelines calculation).
Finally, restitution may be “joint and several,” meaning that
only one restitution amount need be determined for defendants who are
determined to have participated in the conspiracy during the same
time frame. See 18 U.S.C. § 3664(h); see also, e.g., United States
v. Sullins, 529 Fed. App’x 584, 587 (6th Cir. 2013) (finding district
court did not abuse its discretion in entering order of restitution
holding defendant jointly and severally liable under the MVRA for
entire amount of loss caused by conspiracy).
B.
Restitution Must Be Ordered for Losses Incurred by the
Victim Lenders as a Result of the Conspiracy
In this case, the applicable amount of restitution for each
defendant is the aggregate amount of loan proceeds disbursed by the
SBA and the lenders who funded the Paycheck Protection Program
(“PPP”) and Economic Injury Disaster Loan (“EIDL”) program loans that
were the subject of the fraud conspiracy for which all three
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defendants were convicted. For defendants R. Ayvazyan and
Terabelian, the restitution amount as to each lender and the total
restitution amount owed in the aggregate ($16,464,071.26) is
reflected in the actual loss column of the loss chart attached as
sealed Exhibit 1 to the Declaration of Catherine Ahn in support of
the Government’s Sentencing Position for Defendant Marietta
Terabelian. (See ECF Nos. 1147, 1148; see also R. Ayvazyan PSR ¶ 49;
Terabelian PSR ¶ 78.) The lender-specific and total restitution
($17,723,141.26) amounts owed by A. Ayvazyan are similarly set forth
in the actual loss column of the loss chart attached as sealed
Exhibit 1 to the Declaration of Catherine Ahn in support of the
Government’s Sentencing Position for Defendant Artur Ayvazyan. (See
ECF 1133; see also A. Ayvazyan PSR ¶ 77.) In both cases, the sealed
exhibits consist of loss charts with various columns of information
regarding the fraudulent loans connected to the conspiracy including,
among other things, the actual losses sustained by the lenders. This
evidence is in addition to that offered at trial, which included,
among other things, the testimony of Marylee Robinson and Government
Exhibits 115 and 116, which were summary charts providing further
evidence linking loans set forth in Exhibit 1 to the Ahn Declarations
to the fraud conspiracy for which defendants were convicted.
The Ninth Circuit has recognized that the “primary and
overarching goal of the MVRA is to make victims of crime whole,” and,
in “achieving this objective, Congress intended district courts to
engage in an expedient and reasonable restitution process, with
uncertainties resolved with a view toward achieving fairness to the
victim.” Gordon, 393 F.3d at 1048. The focus of fashioning a
restitution order is accounting for “all the direct and proximate
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losses resulting from the defendant’s conduct, not only for the
reasonable foreseeable losses.” Gossi, 608 F.3d at 581 (emphasis in
original). The losses reflected in the aforementioned sealed
exhibits derived directly from the fraudulent PPP and EIDL loans that
were disbursed from March 2020 to August 2020, during the course of
defendants’ involvement in the conspiracy to fraudulently obtain
COVID-19 relief loan proceeds. The loss amounts – both as to each
individual lender and in the aggregate - were the direct and
proximate result of defendants’ participation in the conspiracy and
are appropriately compensable as restitution.
Specifically, the sealed Exhibit 1 to the Ahn Declaration in
support of the Government’s Sentencing Position for Terabelian, upon
which the government also relied in its sentencing position as to R.
Ayvazyan, sets forth the list of loans connected to the conspiracy
for which defendants R. Ayvazyan and Terabelian were convicted. The
exhibit includes both a list of the fraudulent loans applied for and
the actual loss attributable to those loans (see Ex. 1 to the Ahn
Declaration in Support of ECF Nos. 1147 at 1-2), as well as a column
depicting examples connecting the loans to the conspiracy (id. at 3-
26). The actual loss sustained as a result of the disbursement of
these loans (and thus the applicable amount of restitution for
defendants R. Ayvayzan and Terabelian) totals $16,464,071.26.5 (Id.
at 2.)
5 Defendants R. Ayvayan and Terabelian filed a motion for
Kastigar relief related to a search of their cellphones at the Miami
International airport in October 2020. (ECF 338.) Although the
Court denied the Kastigar claims in full (ECF 874), the government
has taken a conservative approach for purposes of restitution as to
these two defendants and therefore has excluded certain loans that
were arguably identified solely as a result of the search of those
digital devices.
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Similarly, the sealed Exhibit 1 to the Ahn Declaration in
support of the Government’s Sentencing Position for A. Ayvayzan sets
forth the list of loans connected to the conspiracy for which
defendant A. Ayvazyan also was convicted. The exhibit includes a
list of the loans and the actual loss attributable to those loans
(Ex. 1 to the Ahn Declaration in Support of ECF No. 1133 at 1-2), as
well as a column depicting examples connecting the loans to the
conspiracy (id. at 3-21). The actual loss sustained as a result of
the disbursement of these loans (and thus the applicable amount of
restitution for defendant A. Ayvayzan) totals $17,723,141.26. (Id.
at 2.)
III. FORFEITURE
A.
The Court Should Deny Defendant R. Ayvazyan’s Request to
Modify the Court’s Money Judgment of Forfeiture
In his November 2, 2021 Sentencing Position (ECF No. 1105, the
“Position” or “Pos.”), defendant R. Ayvazyan moved the Court to
effectively eliminate the Court’s October 28, 2021, Money Judgment of
Forfeiture against defendant R. Ayvazyan in the amount of
$1,420,199.6 (See ECF No. 1087.) In substance, defendant R.
Ayvazyan makes two arguments in support of this request: first, that
the Court did not credit amounts forfeited at trial against the
amount of the money judgment (Pos. at 35), and second, that the Court
erred because the funds in question might have come to rest with
codefendant Manuk Grigoryan instead of defendant R. Ayvazyan. (See
Pos., at 38.) The first argument is both legally unsupported and
6 Neither defendant Terabelian nor defendant A. Ayvazyan have
raised challenges to forfeiture as part of these sentencing
proceedings. Thus, the government focuses its arguments here to
issues raised in the sentencing position of defendant R. Ayvazyan.
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factually incorrect, and the second simply belies the evidence at
trial and the jury’s verdict. The Court should deny the request to
modify the money judgment.
1. The Money Judgment Property Discounted Specific
Forfeited Assets
As detailed in the government’s Application for a Money Judgment
of Forfeiture (ECF No. 1053, the “Application” or “App.”), the
government fully acknowledged that under United States v. Thompson,
990 F.3d 680 (9th Cir. 2021), it was limited to seeking a money
judgment of forfeiture only for those funds which came to rest with
any particular coconspirator, and at the same time, was also mindful
of the sprawling complexity of this heavily-litigated case. For
these reasons, the government did not attempt to reopen the
evidentiary record and begin anew tracing fraudulent loans which were
not traced at trial to calculate an amount for defendant’s money
judgment, although that would have been well within the government’s
prerogative.7 See Fed. Crim. Rule. 32.2(b)(1)(B) (permitting
additional evidence and evidentiary hearings in determining
forfeiture).
Instead, for clarity of the record and reasons of judicial
efficiency, the government limited its calculations to only certain
fraudulent loans already traced at trial, through the testimony of
summary witness Marylee Robinson, and relied only on record evidence
7 Indeed, the government would have been fully entitled to
request an evidentiary hearing to begin tracing any of the other
dozens of fraudulent loans that were part of the conspiracy for which
defendant was convicted. As the Court recently recognized at
defendant’s sentencing, the government even may have established by
clear and convincing evidence, although it was not required to do so,
that the total loss amount exceeded $9,500,000.
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already admitted at trial. (See App., Exs. A-C.) Specifically, and
as detailed in the Application, the government traced the following
twelve fraudulent loans (the “Traced Loans”), each of which was
traced by Ms. Robinson at trial and was identified in the First
Superseding Indictment (“FSI”) either as part of the conspiracy
charged in Count One or a Substantive Count upon which defendant was
convicted:
Loan
Borrower
Tracing
PPP x8007
Timeline Transport
GX 115, at 4,9
PPP x7903
Timeline Transport
GX 115, at 4,9
EIDL x3854
Timeline Transport
GX 115, at 4,9
PPP x7305
Sabala Construction
GX 115, at 8
PPP x8101
Mod Interiors
GX 115, at 9
EIDL x8350
Mod Interiors
GX 115, at 9
PPP x7202
Top Quality Contracting GX 115, at 8
PPP x7304
Top Quality Contracting GX 115, at 8
PPP x7706
Top Quality Contracting GX 115, at 8
EIDL x0246
Top Quality Contracting GX 115, at 8
PPP x8210
Turing Info Solutions
GX 115, at 10
EIDL x2336
Turing Info Solutions
GX 115, at 10
For each of the Traced Loans, the government made detailed
deductions where funds traceable to these loans were either
transferred to other coconspirators or spent on specific property
forfeited at trial. (See, e.g., App. at 13 (deducting $82,000
transferred to purchase luxury watches forfeited at trial); id.
(deducting $110,000 transferred for purchase of real property in
Tarzana (the “Tarzana Property”) forfeited at trial); and id., at 15
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(deducting $238,960 transferred to purchase a gold coins forfeited at
trial).)8 As such, defendant R. Ayvazyan’s claim that “[t]he
government has not reduced its request by the amount of property
forfeited in order to avoid double-counting” is simply false. (Pos.
at 35). The government made detailed deductions to ensure it was not
seeking a money judgment based on funds from the Traced Loans which
were spent on assets forfeited at trial.
There is also no serious question that defendant R. Ayvazyan
obtained proceeds from other fraudulent loans beside the Traced
Loans. For example, as traced by Ms. Robinson, defendant R. Ayvazyan
received at least $200,000 into a bank account in the name of
“Inception Ventures,” which was traceable to proceeds of two
fraudulent PPP loans from Wells Fargo Bank and Comerica Bank, with
loan numbers x7709 and x7410, respectively, and collectively worth
$260,338. (See GX 115, at 7.) Because these proceeds were forfeited
as part of the forfeiture of the Tarzana Property, however, the
government properly did not include these loans in the calculation of
the money judgment. This alone is fatal to defendant R. Ayvazyan’s
argument, because as seen with the Tarzana Property, the government
has already excluded forfeited specific assets by not using the
underlying fraudulent loans in its calculation of the money judgment.
Indeed, the government specifically avoided including such loans
because the resulting assets had already been forfeited. None of
defendant R. Ayvazyan’s arguments otherwise have merit.
8 In fact, the Application was overly-conservative in this
respect, and deducted traced funds even where only part of the
property bought with such funds were forfeited. See App. at 15, n.8
(deducting full $238,960 transferred to gold merchant despite having
never recovered multiple kilograms of gold purchased with part of
these funds).
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Defendant R. Ayvazyan first objects that the government has not
deducted $142,050 from the money judgment representing luxury watches
forfeited at trial. (Pos. at 36-37.) Again, the government’s
tracing meticulously followed Thompson. As described above and
acknowledged by defendant, the government did indeed deduct $82,000
for the purchase of these watches, which came from Traced Loans in
the name of Timeline Transport. (See App. at 13.) But the evidence
at trial showed that the remainder of the funds to purchase these
watches was traceable to the Viktoria Kauichko identity. (See GEX
401, at 10 (tracing transfers totaling $145,320 used to purchase the
forfeited watches to a card associated with Kauichko).) But because
the FSI did not allege that defendant R. Ayvazyan was Kauichko
(although there was ample evidence that defendant R. Ayvazyan also
used that identity and was caught carrying banking cards in that
name) in calculating the money judgment the government did not seek
to attribute the amount of fraudulent loans into Kauichko’s accounts
to defendant R. Ayvazyan.9 As described below addressing defendant
R. Ayvazyan’s second point, the government has abided by what was
charged in Count One of the FSI, upon which defendant was convicted.
Indeed, if defendant were right and he were entitled to deduct
Kauichko’s forfeited assets, then he would also need to be held
accountable for Kauichko’s criminal gains in the form of the funds
which came to rest with Kauichko, and thus the money judgment would
need to be increased by at least $667,169 – reflecting those
9 Indeed, because the FSI alleged the Kauichko identity and
accounts were controlled by co-defendant Terabelian (see FSI ¶ 3,
23(b)), in an abundance of caution, in the Application the government
allocated Kauichko’s gains to Terabelian and actually deducted these
amount from defendant R. Ayvazyan’s money judgment. (See, e.g., App.,
at 14, n.7; 16; 16 n.10.)
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fraudulent loan proceeds transferred to Kauichko’s accounts. (See
GEX 115, at 3, 5, 6, 9.) Defendant R. Ayvazyan cannot have it both
ways, claiming that forfeited assets traceable to the Kauichko
accounts should be credited against his money judgment, while the
fraudulent loans paid into the Kauichko accounts should not. If the
Court is inclined to deduct the $142,050 defendant requests, then the
Court must also increase the money judgment by $667,169, reflecting
transfers of fraudulent loans into Kauichko accounts, leaving a net
increase of $525,119.
Similarly, defendant R. Ayvazyan objects that he was ordered to
“forfeit his home despite having contributed $632,193 in untainted
funds towards the down-payment” (Pos. at 37). Again, he
misrepresents the facts. Defendant R. Ayvazyan did not contribute
“$632,193 in untainted funds” – he contributed only $610,000 in total
(see GEX 115, at 7),10 more than half of which was traced to
fraudulent loans. In essence, defendant R. Ayvazyan argues because
he commingled his clean money with his criminal proceeds (for which
he was convicted on Count 26) he should get a credit against his
money judgment.
But defendant R. Ayvazyan fails to acknowledge that the jury
convicted him of a money laundering conspiracy, including by
commingling fraud proceeds into the Tarzana Property (see FSI ¶
53(c)), and ordered forfeiture of the same. Under 18 U.S.C.
982(a)(1), the government is entitled to both the tainted and
untainted funds “involved in” such a money laundering conviction.
10 Reflecting transfers from both the Inception Ventures and
Timeline Transport accounts, each of which were controlled by
defendant R. Ayvazyan. See FSI ¶ 22(a-b).
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Put another way, there simply are no untainted funds for the
government to credit in the Tarzana Property transaction, and as to
the tainted funds, the government has already deducted these
proceeds, either by directly subtracting such funds from the Traced
Loans (see App., at 13 (deducting $110,000 used to purchase Tarzana
Property)), or as described above, by simply not including such loans
in its calculations when all the traced proceeds of those loans were
used to purchase the Tarzana Property. In sum, there is simply
nothing to credit here. Defendant R. Ayvazyan deserves no offset for
the funds he chose to commingle in his money laundering scheme.
In fact, any other holding would run contrary to the fundamental
goal of ensuring that criminals do not profit from crime. The
defense argument fails to understand the purpose of criminal
forfeiture. While restitution restores assets to a victim (as
explained section II above), forfeiture ensures that a criminal does
not enjoy the fruits of crime – which is exactly what defendant R.
Ayvazyan is seeking to do here. See United States v. Newman, 659
F.3d 1235, 1241 (9th Cir. 2011) (“Criminal forfeiture is also
separate from restitution, which serves an entirely different
purpose. Congress conceived of forfeiture as punishment for the
commission of various crimes. The purpose of restitution however, is
not to punish the defendant, but to make the victim whole again”)
(cleaned up), abrogated on other grounds by Honeycutt v. United
States, 137 S. Ct. 1626 (2017). “Forfeitures help to ensure that
crime does not pay: They at once punish wrongdoing, deter future
illegality, and ‘lessen the economic power’ of criminal enterprises.”
United States v. Prasad, No. 19-10454, 2021 WL 5174096, at *8 (9th
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Cir. Nov. 8, 2021) (quoting Kaley v. United States, 571 U.S. 320, 323
(2014)).11
For example, if a defendant stole a million dollars, and spent
half on luxurious living and invested half in a property which
ultimately doubled in value prior to being forfeited at trial, under
the defense theory, the government would be entitled to no money
judgement, because a million dollars was stolen and a million dollars
forfeited. And under a theory of restitution, the defense might be
correct. But forfeiture is not restitution – the goal of a money
judgment of forfeiture is not to make the government whole, but to
force the defendant to disgorge the value of those assets he has
already dissipated. See Prasad, 2021 WL 5174096, at *5 (Congress
intended criminal forfeiture to ensure criminals “disgorge their ill-
gotten gains, even those already spent.”). Because the government
11 Prasad was decided on November 8, 2021, roughly one week after
defendant R. Ayvazyan filed his sentencing position and the
government responded, and this very-recent binding precedent
reinforces why the defendant’s argument regarding the Tarzana
Property must fail. In Prasad, the Ninth Circuit held that
calculation of a money judgment must be based on the proceeds of the
underlying offense, not a defendant’s profit or loss after
reinvestment or use of those proceeds. 2021 WL 5174096, at *3,6-7.
Thus in Prasad, the defendant was liable to the government for a
money judgment in the full amount of the fraudulent proceeds he
received in an immigration visa scheme, and could not deduct amounts
he had paid to the workers he hired as part of this scheme – in sum,
the gross proceeds of the fraud were what mattered, not what was
actually left in defendant’s pocket. Id., at *5-6, 8 (forfeiture
statutes do not “allow a defendant to avoid forfeiture of certain
property obtained from his criminal activity by reinvesting it in the
criminal enterprise or using sophisticated accounting practices to
conceal profits.”). So too here: the calculation of defendant’s
money judgment must be (and was) based on the fraud proceeds he
received from the Traced Loans, and his subsequent commingling and
investment these proceeds in the Tarzana Property cannot reduce the
proceeds he must repay through a money judgment. See id. at 7 (“[T]he
focus of forfeiture is whether the defendant obtained the property
from the commission of the crime, not whether the defendant made a
profit based on what he later chose to do with that property.”).
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cannot forfeit criminal proceeds already spent on “wine, women, and
song,” Newman, 659 F.3d at 1243, the money judgment of forfeiture
does the next best thing, by creating an in personam debt to the
government the criminal must pay down, effectively forcing him to
disgorge the value of these dissipated criminal proceeds. This is
exactly what the government has done here by calculating the Traced
Loans and making deduction from those loans.
Finally, defendant R. Ayvazyan asks to deduct the entire
$451,185 in seized cash found forfeited at trial, but as the
government addressed in the Application (App. at 14, n.6), there is
no basis for crediting this one defendant with the entirety of this
forfeiture. On the present record, the Traced Loans did not result
in property which was forfeited, and as noted above, the government
was conservative in making deductions. The government fully
acknowledges that it is theoretically possible that some of the funds
traced in the Application could have ended up in the forfeited bag of
cash, but some approximation is permitted under Thompson, because
career criminals like defendant R. Ayvazyan intentionally do not keep
accurate records tracing where their bags of stolen cash come from.
990 F.3d at 692. If the Court were inclined to make any deduction
for this forfeited sack of cash, at most defendant should be credited
a pro rata share of $53,398, because there is simply no way to know
how much of the forfeited bag of cash came from any one defendant’s
share of the fraud proceeds. Ultimately, the Ninth Circuit was clear
in Thompson that, in determining whether and what funds came to rest
with any co-conspirator, a trial court need not be exact, and may
take into account the questionable nature of how criminals hide
criminal proceeds. 990 F.3d 680, 692 (“The numbers used throughout
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this opinion of course may be approximate because swindlers and other
criminals may be less than honest…”). This is a textbook case of the
soundness of the Ninth Circuit’s holding in Thompson: these
defendants used a web of stolen identities in order to obtain, hide,
and launder fraud proceeds. They intentionally did not keep assets
in their own names, for the very reason that they wanted to conceal
their ownership of these assts. Some approximation is inevitable,
and the money judgment signed by the Court reflects just such a
reasonable approximate in light of the scheme for which defendant R.
Ayvazyan was convicted.
Ultimately, defendant R. Ayvazyan would have the Court reopen
the evidentiary record and force the government to conduct a massive
new tracing exercise, likely occupying days or weeks of the Court’s
time, in order to trace every single loan which was part of the
conspiracy to create a full accounting of every last dollar that
defendant R. Ayvazyan and his cohorts stole, before the Court could
impose a money judgment. The rules do not require any such exercise.
The government has calculated the traced loans and made all
appropriate deductions, and to the extent the government chose not to
trace other fraudulent loans than those seen at trial such a decision
inures to defendant’s benefit.
2. The Money Judgment Properly Reflects Tainted Funds that
Came to Rest in Accounts R. Ayvazyan Controlled
Defendant R. Ayvazyan’s second argument – that the funds the
government traced in the Application were not actually his – is
similarly without merit. Similar to their arguments at trial,
defense counsel attempt to distract the Court by pointing the finger
at codefendant Manuk Grigoryan – a defendant who pleaded guilty,
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admitted responsibility, acknowledged remorse, and has not absconded
– arguing that Grigoryan might have received the funds the government
has traced in the Application. (Pos. at 38-39.) The Court has
repeatedly rejected defendant R. Ayvazyan’s “multiple conspiracies”
theories accusing Grigoryan of being the true villain here, most
recently by finding at defendant R. Ayvazyan’s sentencing that he was
the ringleader directing this conspiracy. The Court should not
entertain defense counsel’s retread arguments to the contrary.
In the conspiracy count for which defendant R. Ayvazyan was
convicted, the FSI alleged that he controlled the bank accounts which
received each of the Traced Loans. See App. at 3; FSI ¶ 22. The
jury then convicted on the conspiracy count incorporating these
allegations. And the jury verdict was well supported by the trial
evidence – defendant R. Ayvazyan alone was convicted in Counts
Twenty-One and Twenty-Two which resulted in the deposit of funds into
two of these accounts (specifically those of Top Quality Contracting
and Mod Interiors), and defendant R. Ayvazyan was caught red-handed
with nearly half a dozen banking cards in the name of Iuulia Zhadko
when stopped at Miami International Airport – the same alias on
numerous of the accounts which received the proceeds of the Traced
Loans (specially, Timeline Transport, Top Quality Contracting, and
Turing Info Solutions). As such, the Court was well within the
preponderance standard in finding that these accounts, and thus the
proceeds of the Traced Loans, were controlled by defendant.12
12 Defense counsel argues that defendant R. Ayvazyan was
acquitted on Counts 28-32 which alleged post-arrest money laundering
counts, but defense counsel fails to address the conspiracy for which
he was convicted. (See App., at 5-6, 16-17.) The fact that the jury
did not find beyond a reasonable doubt that defendant conducted the
(footnote cont’d on next page)
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At sentencing, the Court found by at least a preponderance that
defendant R. Ayvazyan was the ringleader of this “horrendous” fraud
operation. Even if co-defendant Manuk Grigoryan may have had some
access to these accounts while following defendant R. Ayvazyan’s
lead, the jury’s conviction on Count One is more than sufficient to
find that these accounts belonged to defendant R. Ayvazyan, whether
or not he allowed others to access them as part of the scheme.13
IV.
CONCLUSION
For the foregoing reasons, the government respectfully requests
that the Court (1) grant forfeiture in the amounts stated herein;
(2) order restitution in the amount of $16,464,071.26 for defendants
R. Ayvazyan and Terabelian; and (3) order restitution in the amount
of $17,723,141.26 for defendant A. Ayvazyan.
alleged post-release money laundering transactions charged in these
counts does not change the fact that, as detailed in the Application,
as part of the conspiracy alleged in Count One, the government
alleged that Turing Info Solutions fraudulently obtained PPP loan
proceeds under the name of defendant’s alias, Zhadko, which came to
rest in accounts defendant controlled. (See App. at 16-17; GX 115, at
10.) Defendant R. Ayvazyan was convicted of that conspiracy, and as
discussed above, there is ample evidence that defendant R. Ayvazyan
used the Zhadko identity, the name on the Turing Info Solutions
account which received the fraud proceeds. This more than meets the
preponderance standard required at the forfeiture stage.
13 Indeed, in Thompson, the Ninth Circuit specifically held a
defendant could be liable for the entire amount of a jointly held
account. 990 F.3d at 691.
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