LOS ANGELES (CN) - An Armenian-language publisher from Glendale was sentenced to serve 30 months in federal prison after pleading guilty to conspiring to defraud the Internal Revenue Service of over $1 million.
The cooperation of a Russian crime boss helped investigators apprehend Navasard Petrosyan, Assistant U.S. Attorney Bruce Searby said in a phone interview.
Petrosyan, 61, reportedly owned six Armenian-language publications: Rainbow Magazine, Kroonk Magazine, Health and Beauty Magazine, Avangard Weekly, TV Time and Muse Magazine.
Searby said that this case began with an investigation of the so-called Grigoryan organization. This Russian-Armenian syndicate, headed by former Soviet army colonel Konstantin Grigoryan, ran health care clinics and diagnostic companies.
Grigoryan used Petrosyan and Russian publications owner Andranik Petrosian to gain clinic patients.
Searby says that the IRS began investigating the Grigoryan organization in early 2004, and Grigoryan eventually agreed to cooperate with the U.S. Attorney and Internal Revenue Service's health care fraud investigation. This cooperation by Grigoryan led to his associates' convictions.
Petrosyan's co-conspirator, Petrosian, was convicted after an April 2008 trial, Searby said. U.S. District Judge Stephen Wilson sentenced the co-conspirator to 96 months of federal prison in December 2009.
Searby also explained that the Grigoryan and his conspirators paid van drivers who gathered patients for their clinics, but they needed large amounts of cash to pay these van drivers.
Thinking that a large withdrawal of cash from their businesses' bank would raise suspicion, "Petrosyan would arrange for advertisements for the medical businesses to appear in his publications, distributed in Los Angeles County, and elsewhere, to provide a further cover for the cash-back payments of co-conspirators' medical businesses," according to the IRS. Searby further added that Petrosian did the same for the Grigoryan organization.
The co-conspirators deducted all of the payments to the Petrosyan businesses on their tax returns and failed their cash payments as income, according to the IRS.
"Petrosyan negotiated checks from various medical provider clients, disguised the checks as advertising expenditures, and gave back to the clients in cash the face value of the checks minus a fee of several percent," the IRS said in a statement.
By disguising over $3 million worth of cash-back transactions as "advertising" expenditures, the IRS says Petrosyan defrauded it of more than $1 million.
"Co-conspirators operating medical 'management' or 'consulting' businesses in California and elsewhere in the southwestern United States required a source of cash to pay unlawful kickback expenses for purposes of obtaining patient referrals to their medical businesses ... [and] sought to receive income from the accounts of the medical businesses they controlled without such income being subject to assessment as taxable on their personal income tax returns," according to the IRS.
Petrosyan must also serve three years of supervised release when he gets out of prison, according to the sentence handed down by U.S District Judge Gary Feess.
"We're continuing to investigate both health care fraud organizations and those money launderers who help the health care fraud organizations," Searby says.
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