U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 19435 / October 19, 2005
UNITED STATES OF AMERICA v. MELKON GHARAKHANIAN, aka MICHAEL GARIAN, United States District Court for the Central District of California, Criminal No. 05-972
SECURITIES AND EXCHANGE COMMISSION v. NATIONAL INVESTMENT ENTERPRISES AND MICHAEL GARIAN A/K/A MELKON GHARAKHANIAN A/K/A BIKA BALIAN, Civil Action No. (CV 03-0896 DSF (JWJx)) (C.D. Cal.)
ARCHITECT OF $20 MILLION INVESTMENT FRAUD INDICTED
The Commission announced today that on October 5, 2005, the United States Attorney's Office in Los Angeles, California obtained an indictment against Melkon Gharakhanian, aka Michael Garian, age 43, of Van Nuys, California, charging him with eight counts of mail fraud.
The indictment alleges that from late 1999 through 2001, Garian and Glendale-based National Investment Enterprises ("NIE") raised over $20 million from investors. Garian allegedly falsely told investors that he would use their money to purchase various securities for their accounts; had an "inside line" to upcoming "hot" IPOs, particularly for Internet and other technology-related companies; and could deliver large profits quickly. Garian and NIE furthered their scheme by sending investors false monthly account statements that represented that NIE was purchasing large volumes of IPO shares and other securities on their behalf and making large profits from Garian's trading activities. In actuality, the indictment alleges, NIE did not own the type and quantity of securities that were identified on the investors' account statements. Rather, Garian fraudulently misappropriated investor funds for his own personal use and to pay the operating expenses of NIE. The indictment further alleges that when NIE collapsed in 2001, investors lost approximately $5 million.
On February 7, 2003, the Commission filed a complaint against Garian and NIE based upon the same fraudulent scheme that is the subject of the current indictment. Garian and NIE had targeted members of Glendale's large Armenian-American community, many of whom had never invested in the stock market. On April 13, 2004, the United States District Court for the Central District of California ordered Garian and NIE to repay $2,602,490 in ill-gotten gains they received from investors. The court further ordered Garian to pay a civil money penalty in the amount of $120,000 based on his fraudulent conduct. On February 12, 2004, the court entered an order against Garian and NIE permanently enjoining them from committing future violations of the antifraud, investment adviser fraud, and securities and investment company registration provisions of the federal securities laws. On April 16, 2004, the Commission entered an administrative order barring Garian from association with any investment adviser.
For further information, please see Litigation Release No. 17974 (February 7, 2003); Litigation Release No. 18186 (June 10, 2003); Investment Advisers Act of 1940 Release No. 2227 (April 16, 2004); and Litigation Release No. 18677 (April 23, 2004).
[SEC v. National Investment Enterprises and Michael Garian a/k/a Melkon Gharakhanian a/k/a Bika Balian, Civil Action No. (CV 03-0896 DSF (JWJx)) (C.D. Cal)].