The Rise and Fall of the Armenian Power Street Gang: The Largest Federal Racketeering Bust Reveals How an Eastern European Street Gang Grew Into a Lucrative Criminal Enterprise
In February, U.S. prosecutors announced they had broken up the largest racketeering conspiracy in the U.S. and charged nearly 100 alleged gangsters and their associates with kidnapping, extortion, bank fraud, and narcotics trafficking.
The case itself was surprising for its size and the scale of the fraud. Even more surprising to most people were the perpetrators — a little-known gang called Armenian Power that had risen from the streets in East Hollywood to an international syndicate that could orchestrate multimillion-dollar credit card fraud and identity theft schemes that impacted the lives of hundreds of people across the country.
Law enforcement and the Armenian community have long known of Armenian Power, which was formed in the 1980s by Armenian immigrants and others from former Soviet-bloc countries as protection against other ethnic gangs in the neighborhood. But this case brought Armenian Power and its crimes into the broader consciousness.
The case shows how Armenian Power has expanded its reach into drug dealing, illegal gambling rings and sophisticated credit- and debit-card scams that targeted hundreds of unsuspecting patrons of 99 Cents Stores across Southern California.
“These types of criminal organizations — through the use of extortions, kidnappings, and other violent acts — have demonstrated a willingness to prey upon members of their own community,” said United States Attorney André Birotte Jr. “As we have seen in Los Angeles and elsewhere, these groups also engaged in various fraud schemes that clearly have had a significant impact on financial institutions and their customers who have lost millions of dollars and lost their sense of security through identity theft and credit card fraud.”
Dubbed “Operation Power Outage,” the case was cracked by nine federal, state and local law enforcement agencies after a five-year probe. Two federal grand jury indictments and state cases accuse 99 people, most of them Armenian Power members and associates. The charges include identity theft, credit card and debit card fraud, mortgage fraud, bank fraud, gun violations, kidnapping, extortion, gambling, and drug trafficking. It is estimated that the gang made some $20 million.
The FBI announced the arrests on February 16, 2011 in Los Angeles. The case stretched to Denver and Miami where more than a dozen defendants were charged with extortion and fraud.
The allegations are spelled out in a 212-page grand jury indictment filed in U.S. District Court for the Central District of California on January 26, 2011. The court documents lay out the charges and provide a window into Armenian Power. The case has been declared complex because of the number of defendants charged, the nature of the charges, and the volume of documents. Attorneys will sift through some 500,000 pages of documents, 50,000 phone calls, and numerous FBI interviews.
The gang had an extensive portfolio of criminal enterprises, worldwide connections, and tens of millions of dollars, prosecutors allege. As a result, federal authorities threw their collective law enforcement muscle behind the case to take Armenian Power down, employing the same racketeering prosecutions they used against the Mafia in the 1970s.
Gang leaders wielded power among Armenian organized crime figures in Los Angeles, maintained ties with the Mexican Mafia and settled disputes with high-level Russian organized crime figures.
“This organization was about making money at all costs,” said Assistant United States Attorney Marin Estrada, who’s prosecuting the case. “Whether it was through violence, identity theft or otherwise, it was without regard to the hundreds of victims that suffered severe harm as a result of their criminal activity.”
Formed in East Hollywood in the 1980s, Armenian Power members were mostly Armenians and immigrants from former Soviet-bloc countries. The gang formed in response to other ethnic street gangs in the area. From early on, Armenian Power was involved in murders, attempted murders, kidnappings, robberies, extortions, witness intimidation, drug trafficking and fraud, prosecutors say.
Today, Armenian Power is believed to have over 200 documented members and hundreds of associates across Los Angeles County. They maintain hangouts to “plan and commit crimes” and intimidate landlords into letting them use their properties as bases of operations, according to the indictment. Their purpose — making themselves rich and expanding their power, court papers allege.
For the most part, the gang operates behind the scenes, in secret, under the radar. Operating out in the open is bad for business, police say. A younger generation of Eastern European gangster who speaks Russian and Armenian and maintains ties to his parents’ homeland brings a new level of sophistication to their criminal enterprises.
“The younger generation has helped to advance the organization’s technological abilities to commit fraud and to facilitate Internet crimes,” according to a report by the Eurasian Organized Crime Task Force, comprising local, state and federal officers in Southern California. “This technical savvy, coupled with their language capabilities and ability to interface with their countries of origin, makes them difficult to detect.”
Credit and debit card fraud and identity theft were among their most lucrative schemes.
In one scam, gang members installed skimming devices at sales terminals at 99 Cents Stores across Southern California to record account numbers from magnetic strips of credit and debit cards that were swiped into the keypads by patrons. They distracted store clerks and employees while others installed skimming devices. The suspects took the information scanned from credit and debit cards and created counterfeit cards to withdraw money from victims’ bank accounts. The gang made $2 million from this scheme, authorities allege.
They bribed bank employees to get personal banking information of victims who had lots of cash. They used stolen bank account information to impersonate their victims and paid runners to cash forged checks. In some cases, they stole blank checks from victims’ homes. They opened bank accounts in other peoples’ names and took cash from phony loans and lines of credit.
They operated a credit- and debit-card operation out of leased office space in a nondescript industrial section of North Hollywood. At the location, cops found a reader-writer device used to re-encode the magnetic strips on credit and debit cards and skimming devices used to collect account numbers from gas station pumps, court documents allege.
When questioned by police, one of the suspects denied he had ever been to the business. A second suspect told law enforcement that he signed the lease but intended for it to be an import-export business for canned foods.
They were brazen. Gang leaders used smuggled cell phones to carry out bank fraud schemes from prison. They were savvy, networking with their Mexican Mafia connections behind bars to forge partnerships and raise the gang’s profile. Armenian Power members, who had nicknames such as “Capone,” “Guilty,” “Sniper,” “Gunner” and “Menace,” worked hard to raise their stature among fellow gangsters at home and abroad. Gang leaders maintained connections to Armenia and Russia, resolving disputes with high-ranking criminal bosses, authorizing criminal activity, and receiving payments or tribute from members of organized crime.
Mher “Capone” Darbinyan was among those gang leaders, the indictment alleges, authorized to “carry out violent acts and large-scale criminal activity,” charges his attorney, Anthony Colombo, denies.
“The government has accused him of many things that he’s just not involved in,” Colombo said.
The gang’s criminal activities went far beyond fraud, authorities allege. They also dealt drugs and set up illicit gambling operations, fanning out across Los Angeles.
Out of the office of an auto body shop in Los Angeles, the gang packaged up more than 200 pounds of marijuana worth about a half a million dollars. The shop was owned by one of the alleged racketeers, and he and a partner were careful to cover the windows in the main office so they could package the pot after the shop workers left for the day, court papers say. The indictment highlights a dispute between gangsters over marijuana taken in the heist of a stolen U-Haul truck left abandoned on a street in Glendale. Gangsters grew marijuana plants out of several homes in the San Fernando Valley. They even went to great lengths to maintain and expand their marijuana-growing operations, discussed buying fertilizer, watering the plants, packaging them up, and “making sure to vacuum carefully,” the indictment states.
At a location in Northridge, agents seized more than 5 pounds of cultivated marijuana, a Beretta 96 series .40 caliber semi-automatic pistol and ammunition.
From locations across the San Fernando Valley, Armenian Power associates set up gambling tournaments. The first-place prize at one was $5,000. Another one had a $10,000 prize. One suspect told a dealer to contact other dealers and “dress nicely because there would be high rollers at the poker tournament,” the indictment says. One tournament went through the night and didn’t end until 11:30 the next day. At a location in North Hollywood, cops found a poker table marked “Power Poker” with an Armenian crest in the center, thousands of gambling chips and gambling pay-owe ledgers listing amounts bet and owed.
The indictment also describes the more sinister and chilling charges of extortion and kidnapping.
In one case, they allegedly kidnapped and threatened to kill a man if he didn’t pay up. In another, the suspects allegedly threatened the victim and his family if he didn’t pay them repeatedly over several months. In one case, one of the suspected kidnappers told another he thought the victim was going to die of a heart attack when the victim saw his kidnappers wearing masks. The victim was so terrified, the indictment says, he wet his pants.
The next court date is scheduled for May 2012. If convicted, the defendants face anywhere from three years to life in prison.
Cops believe Operation Power Outage will put a crimp on the gang’s activities for some time.
The gang’s impact on youth in the area seems to have faded. Years ago, Armenian youths emulated Hispanic gangsters with shaved heads, tattoos, muscle shirts, and khaki pants. L.A. gang interventionists say they haven’t seen much activity by Armenian Power, a big change from years ago when police officers, teachers and school counselors would brace for fights that used to break out between Hispanic gangs and Armenian Power in and around some Glendale and Los Angeles schools, said William “Blinky” Rodriguez, the executive director of Communities in Schools, a gang intervention and prevention program. “AP has been pretty quiet for some time now.”
Los Angeles County Sheriff’s Sgt. Steve Opferman, who leads the Los Angeles County Health Authority Law Enforcement Task Force that combats health care fraud in Southern California, noted a downtick in activity by Armenian Power.
“The recruitment is lower for the younger guys,” Opferman said. “They’re not as highly visible. They’ve established themselves. They’ve gone a bit more underground.”