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Armenian gang fraud cost victims at least $20 million, authorities say [Updated]

February 16, 2011 |  1:01 pm

At least 74 reputed members of the Armenian Power organized crime gang were charged Wednesday in a fraud scheme that cost Southern California victims at least $20 million, law enforcement officials said.

Click to read the indictment Authorities said members of Armenian Power, or AP, face criminal charges with potential sentences ranging from a few years to life in prison.

DOCUMENTS: Read the indictment

A total of 99 members have been charged in two federal indictments and by the Los Angeles County district attorney with crimes including racketeering, extortion, kidnapping, drug trafficking and identity theft.

Some of the defendants are accused of secretly installing sophisticated skimming devices that allowed them to steal customer account information at a dozen 99-Cent Only stores across the region, according to a 212-page federal indictment unsealed Wednesday in U.S. District Court.

Armenian Power members allegedly caused more than $2 million in losses when they used the skimmed information to create counterfeit debit and credit cards, the indictment alleges.

In addition, authorities allege Armenian Power worked in conjunction with African American street gangs to gather information that allowed them to take over bank accounts, often of older victims, that led to financial losses of $10 million.

Andre Birotte Jr., U.S. attorney for the Central District of California, said members of the gang used violence to maintain their fraudulent activities.

[Updated at 1:53 p.m.: An earlier version of this post incorrectly identified Birotte as an assistant U.S. attorney]

“The common denominator among these defendants and their criminal enterprises is their willingness to commit any crime for profit and to use any means of violence and intimidation to further their goals,” Birotte said.

Birotte cited the kidnapping of a Glendale businessman who was held for $500,000 ransom and threatened with death as an example of the lengths the gang would go to to strike fear in the community.

The culmination of a two-year investigation, Operation Power Outage involved nearly 1,000 officers focused primarily on suspects who live in heavily Armenian neighborhoods in Burbank, Glendale and East Hollywood, but authorities said arrests and indictments also were made in other parts of the country, including Denver and Miami.

The syndicate had global reach, according to law enforcement officials. The indictment described a transnational network that tied Armenian Power to the Mexican Mafia and organized crime gangs in the former Soviet-bloc regions, including Armenia, Georgia and Russia.

Participating law enforcement agencies included the FBI, the Internal Revenue Service, U.S. Secret Service, Immigration Customs Enforcement and the U.S. Department of Health and Human Services' office of the inspector general. Also participating was the Los Angeles County Sheriff's Department and the Burbank, Glendale and Los Angeles police departments.

The bulk of the arrests and search warrants were served without any major incidents. But officials stressed they continued to search for about 24 suspects.

Armenian Power is a small but virulent gang that took root among Armenian immigrants who arrived in Los Angeles in the 1980s and early 1990s, authorities said. The gang has about 200 members.

Law enforcement officials described Armenian Power as having an "extensive portfolio" that combined ruthlessness with opportunism, focusing on white-collar crime that included identity theft crimes such as credit-card skimming.

-- Kate Linthicum and Andrew Blankstein