Mihran Stepanyan, Artur Stepanyan, Yan German, and Khachig Geuydjian pleaded guilty to crimes stemming from their respective roles in a wide-ranging racketeering conspiracy involving diversion of prescription drugs, money laundering, bank fraud, identity theft, and additional crimes, This leaves one remaining defendant to stand trial for allegations made in a Second Superseding Indictment filed in February of 2016 against 38 defendants.
The crimes committed by these defendants ranged from picking up drugs at a pizza shop to a half-million-dollar tax check fraud scheme. In total, more than $199 million in diverted prescription drug proceeds were laundered through bank accounts established with false identities and shell companies.
The four acknowledged that they were members of a nationwide conspiracy referred to in court documents as the Karapedyan-Stepanyan Enterprise. One key aspect of the criminal activity was a multi-million dollar prescription drug diversion scheme.
Members and associates of the Enterprise procured prescription drugs from unlicensed sources, usually street dealers, and resold the drugs to unknowing customers. The Stepanyans also admitted that they are not licensed to sell drugs, that they procured millions of dollars of drugs through street suppliers and other unlicensed sources, and that the drugs they procured eventually were resold as legitimate products.
Members of the Enterprise conducted the affairs of the organization through a pattern of racketeering and committed crimes throughout California as well as in Minnesota, Ohio, and Puerto Rico. Members and associates of the Enterprise procured and distributed a wide variety of drugs from unlicensed sources for distribution throughout the country.
The drugs included medications used to treat HIV infection, Type-2 diabetes, dementia, and high blood pressure, among other conditions.
Members and associates of the Enterprise also created false and fraudulent paperwork, referred to as pedigrees, to make it appear that those drugs had been purchased from legitimate sources. In addition, they created sham companies and used multiple bank accounts to receive and distribute the proceeds from their fraudulent transactions.
The plea agreements also describe how the Stepanyans, along with other members and associates of the Enterprise, intentionally used the identities of real people to carry out their unlawful objectives.
Geuydjian’s plea agreement describes how he negotiated fraudulent personal and tax checks for the benefit of the Enterprise, and German’s plea agreement describes how he supplied drugs for distribution by the Enterprise and managed aspects of the Enterprise’s money laundering operations.
Stepanyan became a member of the Enterprise as early as January 2010. He admitted that he agreed with his co-conspirators to commit multiple criminal acts involving money laundering, mail fraud, wire fraud, bank fraud, identity theft, and multiple acts involving the distribution of drugs from unlicensed sources to conduct the affairs of the Enterprise. Stepanyan admitted that he controlled several entities through which approximately $199 million of pharmaceutical money flowed between 2010 and 2014.
All four defendants pleading guilty have released on bond pending sentencing. A majority of the defendants in this case have pleaded guilty to various charges.