LOS ANGELES
A Montrose was arrested on a federal grand jury indictment charging him with defrauding investors out of more than $1 million via an adult entertainment website scam, prosecutors announced Monday
Patrick Khalafian, 51, was arrested Friday on a single-count indictment charging him with wire fraud.
At his arraignment, Khalafian pleaded not guilty to the charge, officials stated.
The indictment alleges that, 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.
Khalafian allegedly represented that victims’ investments would be used for business operations, including developing software and the platform for the proposed websites, paying for servers, hiring employees, and purchasing advertising.
He also promised that victims’ investments would be repaid by a certain date, according to the indictment.
Instead, Khalafian allegedly used the victim investors’ funds on gambling, luxury shopping sprees, and to pay back other investors.
Khalafian allegedly lied to his victims about the status of the adult entertainment websites and eventually stopped responding to victims, disconnected his phone number, and changed his email address.
In July 2015, Khalafian received $1 million of ill-gotten gains wired from a victim’s bank account in Canada to a bank account he controlled in Woodland Hills, according to the indictment. Prosecutors believe this amount comprises approximately half of the money Khalafian raised via this scheme.
If convicted, Khalafian is facing up to 20 years in federal prison.
The FBI investigated this matter
