A prominent Glendale Democratic activist and attorney pleaded guilty Friday for his part in laundering money to aid a large-scale tax fraud scheme.
Arthur S. Charchian, president of the Southern California Armenian Democrats organization, pleaded guilty to money laundering and making a false statement to the Social Security Administration, according to Ciaran McEvoy, a spokesman for the U.S. Attorney’s Office.
Charchian, 44, is scheduled to be sentenced Sept. 9.
Charchian used trust bank accounts of two clients as a way to launder about $549,000 in profits from a tax fraud scheme, according to his plea agreement. Attorneys use the trust accounts to segregate money from the attorney’s funds.
The scheme involved stealing the identities of people to open bank accounts and file bogus tax returns. When banks would reject the ill-gotten gains, some of the defendants turned to Charchian to launder the money through the client accounts for a 10 percent fee.
Prosecutors have charged 17 defendants in the tax scheme, which involved about 7,000 bogus returns seeking about $38 million in refunds, McEvoy said.
The Internal Revenue Service issued about $14 million in refunds.
Of the 17 defendants, 11 have pleaded guilty. Four defendants are at-large, and two are awaiting trial.
Charchian’s attorney, Mark Werksman, said his client learned he was a target of investigators a couple of months ago and quickly moved to accept responsibility.
Charchian was unaware of the fraud scheme when he agreed to help the defendants, Werksman said.
“He was used as a pawn by the bad guys,” Werksman said.
Charchian “is a good person and an excellent lawyer who was taken advantage by the bad guys, who were stealing money from the government,” Werksman said.
“He should have known he was being used, but he avoided learning the truth until it was too late and now he’s taking full responsibility for his actions,” Werksman said. “He will pay a dear price for his carelessness, but he’s fully remorseful and deserves a compassionate outcome because this is the only blot on an otherwise flawless record.”
Charchian faces up to 15 years in prison, but it is likely it will be much less than that, “and he’s an excellent candidate for probation,” Werksman said.