California Man Gets Prison for $860,000 Tax Refund Check Cashing Scam

A 37-year-old Van Nuys, California, man was sentenced to 30 months in prison Monday after laundering more than $860,000 in proceeds from a tax-fraud scheme, officials said.

Karen Aharonian, who used to live in Glendale, pleaded guilty in July to one count of money laundering, admitting to cashing 34 third-party checks — totaling $184,330 — one day in September 2012 while on supervised release for a separate criminal case.

Aharonian was initially indicted on seven counts of money laundering, but six of those counts were dismissed as part of the plea agreement reached with prosecutors.

Between August 2010 and October 2012, Aharonian cashed more than $860,000 in illegally obtained tax refunds, according to court records.

The scheme involved the submission of fraudulent tax returns in the names of actual taxpayers, which resulted in the Internal Revenue Service issuing tax refunds, most of which were deposited directly into bank accounts.

Aharonian took blank, signed third-party checks to a check-cashing business — the owners of which were also charged with money laundering — and requested cash amounts via Post-it notes.

The owners, who were not identified because their case is sealed, pleaded guilty to money-laundering charges, court records show.

The owners began cooperating with the IRS in August 2012, at which point they told investigators they had three customers who brought them “large quantities of checks to cash.” One of them was Aharonian, whom they knew as “Michael 3.”

Between Sept. 5, 2012, and Oct. 30, 2012, investigators were monitoring meetings between Aharonian and the check cashers, during which Aharonian brought in more than $700,000 in checks.

Prosecutors said the total amount laundered between August 2010 and October 2012 was especially high given Aharonian spent half of that time in prison.

Aharonian was incarcerated from October 2010 and November 2011 after he was convicted of conspiracy to commit racketeering for his part in a Medicare fraud and money-laundering conspiracy, records show.

According to a court document filed by Aharonian’s attorney, Aharonian was drawn to criminal activity while he was struggling financially without a green card and trying to care for his young daughter.

After November 2012, Aharonian “rebuilt his life,” staying out of trouble until his arrest this past February, the document states.

According to the document, Aharonian was not involved in the underlying wire fraud and “did not profit significantly from his role,” earning less than $25,000 for cashing the checks.

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