U.S. attorneys on Tuesday indicted 17 people suspected of taking part in a conspiracy to withdraw nearly $9 million from fraudulent pharmaceutical sales in increments small enough to avoid federal bank reporting requirements.
Two of the people included in the indictment were from Glendale: 23-year-old Areg Bezik and 55-year-old Andre Beziki, who died earlier this year before he could be arrested, according to the U.S. attorney's office.
Prosecutors allege that the group withdrew more than $8.9 million in “structured” transactions designed to be below the federal reporting requirement for banks of $10,000. The conspiracy was allegedly carried out from 2009 through April 2011, with authorities listing 251 transactions.
The scheme was allegedly orchestrated by Peter Kats, 31, of Beverly Hills, and Aziz Nurhan, 30, of North Hollywood. They were among nine others listed in the indictment who were arrested Tuesday morning.
Four others were believed to be fugitives living outside the U.S. Another was already in federal custody.
Kats and Nurhan allegedly deposited the money using proceeds from a “pharmaceutical diversion scheme” in which the firm bought drugs from the black market and other “non-authorized” sources and sold them to legitimate wholesalers.
The wholesalers, in turn, sold those drugs to retailers, according to the U.S. attorney's office.
All 17 defendants listed in the indictment face five years in prison if found guilty of the conspiracy charge, with Kats and Nurhan facing an additional 10 years for allegedly orchestrating the structured bank transactions.
Kats was also accused of defrauding two American Express subsidiaries. For those charges, he faces an additional 30 years in federal prison.
The indictment was the result of a joint investigation with the FBI, Internal Revenue Service and the U.S. Postal Inspection Service.