Thursday, February 17, 2011

Organized Crime: US - Dozens of Armenian Power Organized Crime Group Members Arrested

United States Attorney's Office
Central District of California

LOS ANGELES—As a result of two federal indictments and state cases that charge a total of 99 defendants with a wide range of crimes—including kidnapping, extortion, bank fraud, and narcotics trafficking—law enforcement authorities this morning arrested 74 members and associates of the Armenian Power organized crime group.

The majority of the defendants arrested this morning are named in two federal indictments that charge a total of 88 defendants linked to Armenian Power, which is commonly called AP.

One indictment accuses 29 defendants with participating in a RICO conspiracy in violation of the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO charge alleges a host of illegal activities, some of which are sophisticated white-collar crimes such as identity theft, credit card skimming, and manufacturing counterfeit checks. Among the conspiracies charged in the racketeering indictment is a bank fraud and counterfeit credit card scheme that victimized hundreds of customers of 99 Cents Only Stores throughout Southern California. AP members allegedly caused more than $2 million in losses when they secretly installed sophisticated "skimming" devices to steal customer account information at cash registers and then used the skimmed information to create counterfeit debit and credit cards.

The 134-count racketeering indictment returned three weeks ago by a federal grand jury in Los Angeles charges a total of 70 defendants. In addition to the RICO count that includes nearly 450 overt acts, the indictment includes charges against AP members for kidnapping, extortion, bank fraud, aggravated identity theft, credit card fraud, marijuana distribution, and conducting an illegal gambling business.

"The indictments that target the Armenian Power organized crime enterprise provide a window into a group that appears willing to do anything and everything illegal to make a profit," said United States Attorney AndrĂ© Birotte Jr. "These types of criminal organizations—through the use of extortions, kidnappings, and other violent acts—have a demonstrated a willingness to prey upon members of their own community. As we have seen in Los Angeles and elsewhere, these groups also engaged in various fraud schemes that clearly have had a significant impact on financial institutions and their customers who have lost millions of dollars and lost their sense of security through identity theft and credit card fraud."

Steven Martinez, Assistant Director in Charge of the FBI in Los Angeles, stated: "Investigators from nine agencies leveraged their collective expertise to identify the threat posed by members of Armenian Power, a criminal enterprise with over 200 members, bent on generating illicit revenue to expand its power base. While some organized crime groups have been largely suppressed, others, including AP, have managed to grow from a street gang into an international organized crime group, carrying out criminal activity that runs the gamut from bank fraud schemes to extortion to kidnapping, and capable of making every citizen of the community a potential victim."

The second federal indictment was returned by a federal grand jury in Orange County and charges 20 defendants, two of whom are also charged in the racketeering indictment. Similar to the some of the schemes alleged in the racketeering indictment, the Orange County case alleges that AP members engaged in a bank fraud scheme that targeted elderly victims. Investigators found that members of the Armenian Power organization were working in conjunction with members of African-American street gangs and bribed bank insiders to gather information that allowed them to take over bank accounts and cause losses of at least $10 million.

In addition to the federal indictments, the Los Angeles County District Attorney has charged 11 defendants in seven cases filed in superior court, which means that a total of 99 members and associates of Armenian Power have been charged.

In separate actions brought by federal authorities in Miami and Denver, and announced along with the Los Angeles indictments by the Department of Justice, more than a dozen additional defendants, some of whom are linked to Armenian Power, were charged with extortion and fraud offenses.

"Members of the organized crime groups charged today have allegedly committed literally hundreds of criminal acts—running the gamut of extortion, kidnapping, bank fraud, health care fraud, drug trafficking, and more. The common denominator among these defendants and their criminal enterprises is their willingness to commit any crime for profit, and to use any means of violence and intimidation to further their goals," said Assistant Attorney General Breuer of the Justice Department's Criminal Division. "In less than one month, however, the department has undertaken the largest one-day takedown of La Cosa Nostra; a coordinated national effort against street gangs; and today, taken action against Armenian Power and others with ties to international organized crime. These groups bring fear into our communities, defraud innocent victims, and put the safety and security of neighborhoods and our country at risk. We are taking an aggressive stand against these organized criminal groups and will continue our efforts to put them out of business."

The Los Angeles investigation into Armenian Power—dubbed Operation Power Outage—was conducted by the Eurasian Organized Crime Task Force, which is made up of the Federal Bureau of Investigation, the United States Secret Service, U.S. Immigration and Customs Enforcement, the Office of Inspector General for the U.S. Department of Health and Human Services, IRS - Criminal Investigation, the Los Angeles County Sheriff's Department, the Los Angeles Police Department, the Glendale Police Department, and the Burbank Police Department. The Orange County bank fraud indictment is the result of an investigation by the United States Secret Service and the Eurasian Organized Crime Task Force.

"This investigation has been a collective effort of our Orange County Resident Office and the Los Angeles Field Office for over the past five years," said Wayne Williams, Special Agent in Charge of the United States Secret Service. "As with everything we do, our success is only achieved with the continued support of our local and federal counterparts. Operation Power Outage demonstrates that collaborative efforts between local and federal law enforcement is alive and well in the Los Angeles Metropolitan area."

Operation Power Outage focused on Armenian Power, a criminal enterprise whose membership consists primarily of individuals whose heritage goes back to Armenia and other Eastern Bloc countries. AP is an international organized crime group that started as a street gang in East Hollywood in the 1980s. While members often identify themselves with tattoos, graffiti and gang clothing, the organization is less concerned with controlling "turf" than traditional street gangs and has long maintained a presence in several communities in the Hollywood area and the San Fernando Valley.

"We enjoy a strong relationship with federal law enforcement agencies and the U.S. Attorney's office," said Chief Ron De Pompa of the Glendale Police Department. "Operation Power Outage is sending a strong message to the criminal element victimizing the citizens of our communities. The cooperation and the marshalling of resources with our allied agencies enable us to dismantle these organizations."

The federal indictments allege a wide variety of different violent and fraud-related crimes—offenses that were allegedly conducted repeatedly and routinely. The alleged crimes include kidnapping, extortion, assault, witness intimidation, and drug distribution. In one kidnapping scheme, several AP members seized a victim and forced him to pay ransom by taking him to an auto body shop belonging to an AP member and threatening him with violence. Several defendants allegedly targeted another victim in an extortion scheme lasting several months, in which they threatened the victim and his family in order to extract repeated payments from the victim. The indictment alleges that the defendants repeatedly possessed and distributed marijuana and firearms.

"It is with a great deal of satisfaction that Operation Power Outage has successfully concluded," said Burbank Police Chief Scott LaChasse. "The Burbank Police Department's primary objective has been to work in collaboration with allied law enforcement agencies to ensure that our community is safe and secure. The teamwork involved in Operation Power Outage underscores the commitment and professionalism of all involved personnel and agencies."

The financial fraud crimes committed on behalf of Armenian Power were highly sophisticated, targeting hundreds of victims and resulting in millions of dollars of actual and intended losses to banks and individual victims. In addition to the scheme involving the 99 Cents Only Stores, AP members allegedly engaged in a large-scale check fraud scheme in which they unlawfully obtained customer information for high-value bank accounts, impersonated the bank customers to acquire checks, and then cashed and deposited checks in an effort to deplete the accounts. At times, members of the conspiracy allegedly went to victims' residences to steal blank checks that had been mailed to them.

"We are concerned with the increased level of fraud committed by these organized groups," said Glenn Ferry, Special Agent in Charge for the Office of Inspector General of the Department of Health & Human Services. "The charges levied here today are similar to the identity theft schemes we are seeing in health care fraud investigations, that allow criminals to steal millions from the Medicare and Medi-Cal programs. We intend to aggressively pursue those who are committing these acts."

"Today's takedown of the Armenian Power street gang is indicative of law enforcement's resolve to investigate and prosecute those criminals who use violence and intimidation in promoting and protecting their criminal enterprises," said IRS-Criminal Investigation acting Special Agent in Charge Joel P. Garland. "IRS-Criminal Investigation plays a unique role in federal law enforcement's resolve to dismantle the criminal gang enterprises terrorizing our streets. Our agents target the profit and financial gains of organized criminal gangs, essentially following the money, to disrupt these organizations and enhance criminal prosecutions."

The investigation revealed that some Armenian Power members continued to be involved in various schemes even after they were convicted in state court and incarcerated. Two of the defendants are accused of using smuggled mobile phones to coordinate bank fraud schemes while in state prison, and one of those defendants allegedly helped organize a scheme to threaten and extort another person while he was in prison.

According to the racketeering indictment, Armenian Power, which is also known as AP-13, is closely allied with the Mexican Mafia, a prison gang that controls much of the narcotics distribution and other criminal activities within California correctional facilities. In addition to its connections to criminal groups operating in California, such as the Mexican Mafia, AP leadership maintains ties to Armenia and Russia and deals directly high-level Armenian/Russian organized crime figures. Among those high-level crime figures are traditional "Thieves-in-Law," who are used to resolve disputes and address criminal activity. Because of its large network of members and associates, its demonstrated ability to carry out acts of violence, and its strong relationship with the Mexican Mafia, Armenian Power leaders interact with traditional Thieves-in-Laws as equals. At times, AP members and associates confront and commit acts of violence against associates of traditional Thieves-in-Law in a demonstration of the authority of AP leadership.

"This successful multi-agency investigation concentrated on a racketeering criminal organization comprised of high-level Russian/Armenian crime figures responsible for violent acts on innocent victims and numerous fraudulent activities," stated Los Angeles County Sheriff Lee Baca. "The criminal activities of these enterprises threaten our communities; economy and undermine the positive efforts of law enforcement."

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until and unless proven guilty in court.

If convicted, the defendants indicted as a result of Operation Power Outage face varying prison sentences, depending on the charges. For example, the defendants named in the RICO count faces up to 20 years in federal prison for that offense, and those charged in the marijuana-related offenses face mandatory minimum sentences of 10 years for the narcotics offenses.

The Eurasian Organized Crime Task Force Task Force worked with several other law enforcement agencies that provided substantial assistance during this morning's takedown, including the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Drug Enforcement Administration; the Los Angeles County District Attorney's Office, Bureau of Investigation; the United States Marshals Service; and investigators with the California Department of Motor Vehicles.