LOS ANGELES – A Montrose man pleaded not guilty on Monday for defrauding more than $ 1 million in investors over an adult entertainment website scam.
Fifty-one-year-old Patrick Khalafian was arrested on Friday on charges against the federal grand jury for wire fraud, according to the U.S. Department of Justice. After he submitted his request, a hearing was set for December 15 and he was released for a $ 50,000 bond.
If convicted, Khalafian would spend up to 20 years in federal prison, prosecutors said.
The indictment alleges that from November 2009 to October 2016, Khalafian solicited investments for companies – including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC – that allegedly developed and operated adult entertainment websites.
Khalafian allegedly believed that the victims’ investments would be used to run the business, including developing software and the platform for the proposed websites, paying for servers, hiring staff, and buying advertising. He also promised that the victims’ investments would be repaid by a certain date, according to the charges filed in Los Angeles federal court.
Instead, Khalafian allegedly used the funds from the victim investors for gambling, luxury shopping, and repaying other investors. Khalafian allegedly lied about the status of the adult entertainment websites and eventually stopped responding to the victims, disconnecting his phone number and changing his email address.
In July 2015, Khalafian was charged with $ 1 million in illicit profits transferred from a victim’s bank account in Canada to a bank account he controlled in Woodland Hills. Prosecutors believe the amount is roughly half the money Khalafian allegedly raised through the system.