Glendale Attorney Pleads Guilty to Using Client Trust Accounts to Launder More than $500,000 Generated by Tax Fraud Scheme
SANTA ANA, California – A Glendale lawyer pleaded guilty today to federal charges of using his client trust bank accounts to launder proceeds of a $14 million tax fraud and identity theft scheme that used false identities and bogus Republic of Armenia passports to obtain tax refunds from the Internal Revenue Service.
Arthur S. Charchian, 44, entered guilty pleas to two felony counts this morning before United States District Judge Andrew J. Guilford. Charchian pleaded guilty to one count of money laundering and one count of making a false statement to the Social Security Administration.
According to his plea agreement, Charchian participated in a scheme in which he used two client trust bank accounts – which are supposed to be used by attorneys to segregate client funds from the attorney’s money – to launder approximately $549,000 of proceeds generated in a massive “stolen identity refund fraud” (SIRF) scheme.
The underlying SIRF scheme involved schemers who used false identities and fake Republic of Armenia passports to open hundreds of bank accounts that were used to launder funds fraudulently received from the IRS. A total of 17 defendants, including Charchian, have been publicly charged in that scheme, which involved approximately 7,000 fraudulent tax returns that cumulatively sought about $38 million in refunds. The IRS issued about $14 million in refunds. The fraudulent tax returns were filed and the bank accounts were opened with personal identifying information that had been stolen from thousands of victims. With Charchian’s guilty plea today, the federal investigation into the SIRF scheme has resulted in 11 convictions, and the seizure of four residential properties and more than $700,000. Four defendants remain fugitives from justice, and two defendants are scheduled to go on trial next year.
Charchian admitted in court that from 2012 to 2015 he laundered checks that constituted the proceeds of bank fraud, tax fraud, and identity theft. Charchian became involved in the underlying tax fraud scheme when banks flagged accounts being used by co-conspirators to launder proceeds of the SIRF scheme. Charchian received checks from co-conspirators, deposited those checks into his client trust accounts, and then wrote outgoing checks. He admitted charging a 10 percent fee to launder the money.
For example, on May 9, 2014, Charchian deposited a $57,168 cashier’s check payable to a fraudulent identity into his client trust bank account. Later that month, Charchian wrote an outgoing check from the same client trust bank account for $51,468 – the laundered funds, minus the 10 percent.
In total, Charchian laundered more than 15 incoming checks with a cumulative value of $549,352 that constituted fraud proceeds, he admitted in court. He also admitted to cashing checks from the client trust accounts and dispensing cash to the co-conspirators.
Charchian also admitted that on June 4, 2015, he wrote and signed a letter to the U.S. Social Security Administration on his law firm’s letterhead that falsely asserted the $51,468 check represented the proceeds of a “settlement” for a client. Charchian admitted he wrote the fraudulent letter to help a third party continue to receive Social Security benefits, which Social Security officials had reduced when they learned the person had received some of the money from the “settlement” check.
Judge Guilford scheduled a September 9, 2019 hearing to sentence Charchian, who faces a statutory maximum sentence of 15 years in prison.
This case against Charchian and the defendants in the SIRF scheme is being investigated by IRS Criminal Investigation, the Federal Bureau of Investigation, and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.
This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.