LOS ANGELES – A Los Angeles area man pleaded guilty Monday to defrauding investors of more than $1 million “by making false promises that they would receive an ownership interest in several adult entertainment webcam websites and then using their money for personal expenses, including luxury items,” the Justice Department said.
As XBIZ reported, Montrose resident Patrick Khalafian was arrested in 2020 following an FBI investigation and a federal grand jury indictment over the fraudulent scheme.
Khalafian pleaded guilty to one count of bank fraud, the DoJ said in a statement rack. According to his plea agreement, “Khalafian solicited investments for companies – including 168 Entertainment LLC, Empire Entertainment Group Inc. – from November 2009 to October 2016. and EEG LLC – which allegedly developed and operated adult entertainment websites.”
Khalafian, the statement continues, “falsely represented to victims that their investments would be used for business activities, including developing software and the platform for the proposed websites, paying for computer servers, hiring employees, and purchasing ads. He also falsely promised that the victims would be repaid for their investments by a certain date, given ownership stakes in the companies, and receive a share of the companies’ profits.
Instead, Khalafian used the money “to pay off his debts, including to previous victims, and to finance his own lifestyle, including paying for gambling expenses and luxury shopping sprees.”
The DoJ also noted that Khalafian “lied to his victims about the status of the adult entertainment websites allegedly developed by the companies in which they had invested. Khalafian eventually stopped responding to the victims, disconnected the call and changed his phone number and email address to avoid their questions.”