LOS ANGELES (CNS) - A Glendale man was sentenced today to seven years behind bars for running a series of “bust-out'' schemes that defrauded more than 20 banks out of nearly $5 million by, among other things, using fraudulently obtained credit cards to buy millions of dollars in liquor and cemetery plots that were later sold for a profit.
Mikayel Hmayakyan, 43, was sentenced by U.S. District Judge George H. Wu, who also ordered him to pay $4.9 million in restitution. Hmayakyan pleaded guilty on June 29 to two counts of bank fraud and one count of aggravated identity theft.
A bust-out scam is a form of fraud in which a person applies for a credit card, often using a stolen identity, with the intention of maxing out the card with no intention of paying off the debt.
Hmayakyan used the fraudulently obtained cards to purchase liquor, luxury watches and cemetery lots that were later sold for profit.
The defendant and his co-conspirators fraudulently obtained credit cards -- sometimes using their real names, but also with synthetic identities created with a combination of real and fictitious information. After the cards were run up to the credit limit, members of the scheme paid down the cards by submitting payments from accounts with insufficient funds or through other fake accounts to restore the credit line, which allowed them to make additional fraudulent purchases.
For example, from 2014 through 2017, Hmayakyan -- with no intention to pay any credit card bills -- charged and directed others to charge over $3 million to buy things such as liquor, Rolex watches and Forest Lawn cemetery plots.
The liquor was purchased on behalf of the now-closed Liquor Spot in Glendale, where co-defendant Vahan Aloyan, 45, of Glendale, was a manager. During the execution of a search warrant in 2016, law enforcement officials seized more than 37,000 bottles of alcoholic beverages, worth approximately $300,000, from the store. They also seized nearly $13,000 in cash, as well as nearly $13,000 in cash and 37 watches and other jewelry items from Aloyan's home, according to court documents.
In another set of scams, from 2010-11 and again from 2015-16, Hmayakyan applied for a number of loans in the name of real and fictitious people. He used the loan proceeds to finance the purchase of vehicles, but would not make the payments. Hmayakyan caused losses of more than $400,000 to the banks who gave those loans.
Gayane Hakobyan, 70, of Hollywood Hills, admitted in June that she participated in the bust-out scheme by allowing others to open credit card accounts in her name. On Oct. 8, Wu sentenced her to two years' probation and ordered her to pay $223,235 in restitution.
Mikayel Hovhannisyan, 38, of North Hollywood, pleaded guilty in June 2019 to one count of bank fraud, served a nine-month federal prison sentence and was ordered to pay $412,413 in restitution.
Aloyan, the case's sole remaining defendant, is scheduled for trial on March 15.
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