LOS ANGELES – A Los Angeles-area man has been arrested after an FBI investigation and a federal grand jury indictment alleging that he defrauded investors out of more than $1 million claiming to run an adult website operation.
Patrick Khalafian of Montrose, California was arrested Friday on a single-count indictment charging him with wire fraud, according to a statement released by the Central District of California office of the U.S. Department of Justice.
At his arraignment on Monday, Khalafian pleaded not guilty to the charge. The next trial date was set for December 15 and Khalafian was released on a $50,000 bond.
The prosecutors allege that “from November 2009 to October 2016, Khalafian solicited investments for businesses – including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC – that purportedly developed and operated adult entertainment websites."
The federal authorities claim that Khalafian told the investors the funds “would be used for business operations, including developing software and the platform for the proposed websites, paying for servers, hiring employees and purchasing advertising,” and also promised a specific repay date.
After the FBI investigation, Khalafian is now accused of allegedly using the funds “on gambling, luxury shopping sprees and to pay back other investors. Khalafian allegedly lied to his victims about the status of the adult entertainment websites and eventually stopped responding to victims, disconnected his phone number and changed his email address.”
If convicted of the charge, Khalafian could face up to 20 years in federal prison.
This case is being prosecuted by Assistant United States Attorney Roger A. Hsieh of the Major Frauds Section.