Tag: Fraud

BEVERLY HILLS—On Monday, July 22, the U.S. Attorney’s Office announced that a suspect pleaded guilty to defrauding investors out of more than $1 million by making false promises that they would receive an ownership interest in several adult entertainment webcam websites and then using their money on personal expenses, including luxury items. Patrick Khalafian, 54, pleaded guilty to one count of wire fraud.

According to his plea agreement, from November 2009 to October 2016, Khalafian solicited investments for businesses – including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC – that purportedly developed and operated adult entertainment websites.

He falsely represented to victims that their investments would be used for business operations, including developing software and the platform for the proposed websites, paying for computer servers, hiring employees, and purchasing advertising. He falsely promised that the victims would be repaid for their investments by a specific date, that they would receive ownership interests in the companies, and would receive a share of the companies’ profits.

Instead of investing the victims funds, he used their funds to pay off his debts, including to prior victims, and to fund his own lifestyle, including to pay for gambling expenses and luxury shopping sprees. Khalafian lied to his victims about the status of the adult entertainment websites purportedly being developed by the companies in which they had invested. He stopped responding to victims and changed his phone number and email address to evade questions.

In July 2015, Khalafian met with one victim at Mastro’s Steakhouse in Beverly Hills and falsely represented at the meeting that a $1 million investment from the victim would be used to pay for business expenses such as computer servers, employees, and advertising for the adult webcam business. The victim – relying on Khalafian’s false promises – wired $1 million to a Khalafian-controlled bank account.

On the same day he received the funds, he transferred $200,000 of the victim’s money to an account to pay his rent, for luxury cars, and other personal expenses. He used $66,000 of the victim’s money to purchase a new Ford F-150 truck and more than $100,000 of the victim’s money at casinos, to pay back another investor, to pay his rent, and on luxury shopping sprees at retailers such as Tiffany, Barney’s, Fendi, Saks Fifth Avenue, and Louis Vuitton. Khalafian never paid the victim back any of his investment, and stopped responding to the victim’s messages in October 2016.

Khalafian admitted to conning two other victims in 2015 and 2016 out of $80,000 and $90,000, respectively, using their money on personal expenses and not his adult webcam business. He did not pay back either victim their money. In total, Khalafian’s fraud caused a total loss of at least $1.17 million.

United States District Judge André Birotte Jr. scheduled a February 21, 2025 sentencing hearing, at which time the defendant will face a statutory maximum sentence of 20 years in federal prison.

By Trevor

WEST HOLLYWOOD—The city is launching an effort to help inform community members about how to protect themselves from cryptocurrency fraud and scams.

The city of West Hollywood reported on its website that cryptocurrency is digital currency acquired through an app on a phone, a website, or at a cryptocurrency Automated Teller Machine (ATM). Bitcoin and Ether are well-known cryptocurrencies, but there are others. Scammers can use cryptocurrencies because they do not have the same legal protections as credit cards or debit cards, and payments usually cannot be reversed.

Here are some tips to avoid cryptocurrency scams:

-Only scammers demand payment in cryptocurrency. No legitimate business or government agency will demand any type of payment with cryptocurrency; that is a scam.
-Never pay a fee to get a job. If someone asks for upfront payment to secure a job with cryptocurrency or any other type of payment; that is a scam.
-Never mix cryptocurrency and online dating. If a potential online date asks for cryptocurrency or wants to “help” invest in crypto; that is a scam.
-Do research on companies and organizations before investing or sending money to avoid falling victim to an illegitimate company or website. When companies or websites (fake or not) have look or sound-alike names to well-known organizations, the potential confusion created for consumers is real. Attempting to take advantage of such confusion is a tactic employed by bad actors looking to profit from unsuspecting consumers.

The State of California Department of Financial Protection and Innovation (DFPI) announced the launch of a Crypto Scam Tracker to help Californians spot and avoid crypto scams. The tracker details apparent crypto scams identified through a review of complaints submitted by the public and allows California consumers and investors to complete their own research and prevent harm to themselves and others.

The site features a database searchable by company name, scam type, or keywords to learn more about the crypto-specific complaints the DFPI received. An accompanying glossary aims to help consumers better understand common scams. As reports of new crypto scams emerge, the DFPI will continually update this tracker to promptly alert and protect the public.

For community members who believe they have been a victim of a scam or fraud, or hear about a scam that is currently not listed on the Scam Tracker should notify the DFPI immediately by filing a complaint with the DFPI online at https://dfpi.ca.gov/submit-a-complaint or by calling toll-free: (866) 275-2677.

For more details contact Anita Shandi, West Hollywood’s Public Safety Manager at (323) 848-6446 or at ashandi@weho.org. For people who are Deaf or hard of hearing call TTY (323) 848-6496.

By Trevor

BRENTWOOD–On Friday, February 5, the U.S. Department of Justice announced that Navid Vahedi, 41, of Brentwood, pleaded guilty to one count of conspiracy to commit health care fraud and payment of illegal remunerations. Vahedi also entered a guilty plea to the offense on behalf of his business, Fusion Rx Compounding Pharmacy.

Fusion Rx was a provider of compounded drugs, which are products doctors may prescribe when the FDA-approved alternative does not meet the needs of a patient. In their plea agreements, Vahedi and Fusion Rx admitted routing millions of dollars in kickback payments through the businesses of two marketers to steer prescriptions for compounded drugs to Fusion Rx.

Vahedi and the two marketers provided physicians with preprinted prescription script pads that offered “check-the-box” options on the form to maximize the amount of insurance reimbursement for the compounded drugs. From May 2014 to February 2016, Fusion Rx received approximately $14 million in reimbursements on its claims for compounded drug prescriptions.

Fusion Rx was obligated to collect co-payments from patients as part of contracts with various insurance networks. According to court documents, Fusion Rx did not collect co-payments with any regularity and, in other instances, it provided gift cards to patients to offset the amount of the copayments. Vahedi directed Fusion Rx funds to be used to purchase American Express gift cards, which were then used to make copayments for certain prescriptions without the patients’ knowledge after an audit raised concerns that Fusion Rx’s failure to collect copayments would be discovered. Fusion Rx later submitted claims on these prescriptions falsely representing that patients had paid the required copayments.

Vahedi and Fusion Rx have agreed to pay restitution related to the copayment reimbursement part of the scheme, which is estimated to be $4,405,926. Vahedi also agreed to forfeit $1,338,511 in addition to his obligation under the plea agreement.

Fusion Rx has also agreed to pay a fine sufficient to divest itself of all its remaining assets and Vahedi has agreed to have his pharmacist license revoked. Both Fusion Rx and Vahedi will be excluded from federal health care programs such as Medicaid and Medicare going forward.

A sentencing hearing is scheduled for June 28, in which Vahedi will face a maximum sentence of five years in federal prison.

By Danielle