AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREGift Box shows no rust in San Antonio Stakes win at Santa Anita Investors in National Investment were led to believe that their money was being put in mostly stocks and initial public offerings for high-tech stocks and Internet companies. Part of the money was used to pay old investors, as in other Ponzi schemes. Money was also used to pay salaries and other expenses at National Investment and to invest in certain securities about which investors were never told. “He did not personally enrich himself,” John Yzurdiaga, Gharakhanian’s attorney, said after the court hearing. Gharakhanian, who is free on $100,000 bond, had a small staff, none of whom were charged in the case. He also told investors about an individual named Bika Balian, who he said was overseeing finances, but Balian did not exist, Wilner said. Most of the investors were from the San Fernando Valley, including many Armenian-Americans from Glendale. The scheme could have netted as much as $10 million. A Van Nuys man pleaded guilty Wednesday to defrauding dozens of investors of at least $2.5 million under a plea bargain reached with federal prosecutors. Melkon Gharakhanian, 44, also known as Mike Garian, pleaded guilty to one count of mail fraud. He faces up to five years in prison, but prosecutors will seek three years when he is sentenced on May 1. Prosecutors say they will drop seven additional charges as part of the plea deal. Authorities said Gharakhanian failed to tell investors he had filed for personal bankruptcy before establishing National Investment Enterprises Inc. The Glendale company defrauded more than 40 victims between 1999 and 2001 in what prosecutors say was a classic Ponzi scheme – using money from new investors to pay earlier investors. “To the extent the money was misused, it was not necessarily put in his pocket. However, there’s no doubt that Mr. Gharakhanian lived a very comfortable lifestyle,” Assistant U.S. Attorney Michael Wilner said outside the courtroom at U.S. District Court in downtown Los Angeles. In 2004, the U.S. Securities and Exchange Commission secured a $2.6 million judgment against Gharakhanian, but he has been unable to pay it. Gharakhanian is Canadian and could eventually be deported as a result of his conviction. Alex Dobuzinskis, (818) 546-3304 [email protected] 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set!