8 Plead Guilty in $2.62-Million Disaster Fraud Scheme : Courts: After the Los Angeles riots, they applied for loans for inflated damages or for businesses that never existed. Officials say a wide investigation is continuing.

Eight people accused of taking part in what is believed to be the biggest disaster loan fraud case in U.S. history pleaded guilty Tuesday to trying to cheat the government out of millions of dollars after the 1992 Los Angeles riots, federal authorities said.

The eight, all residents of Los Angeles County, were among 10 people charged in an indictment returned last month by a federal grand jury, said Terri Price, a special agent with the U.S. Small Business Administration. The guilty pleas were entered in U.S. District Court in Los Angeles.

Two suspects in the case who have not entered guilty pleas are believed to be ringleaders who directed a widespread loan fraud scheme that federal agents have been investigating since March, Price said. The investigation now encompasses more than 100 fraudulent loan applications related to the riots, the 1993 Calabasas/Malibu fires, and last year’s Northridge earthquake.

“We’ve just won a battle in a much larger war,” said Price, the lead investigator on the case. “Our investigation will continue, and we expect additional indictments soon.”

The SBA is responsible for helping disaster victims by doling out low-interest, federally subsidized loans of up to $1.5 million per applicant. SBA officials, who have approved more than 116,000 disaster loans for a total of $3.73 billion just in response to the Northridge quake, estimate that about 1% of all disaster loans are obtained fraudulently.

The eight people who pleaded guilty Tuesday had applied for a combined $2.62 million in loan money, and had received about $904,000, Price said. They claimed damages for businesses that never existed, Price said, or submitted phony tax returns, invoices and other documents to fabricate or inflate damages.

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One of them, Jakob Yakhobzadehgan, 36, faces up to 25 years in prison and fines totaling $1.25 million, plus repayment of loan money he received. Yakhobzadehgan, who operated King Solomon Rugs on Pico Boulevard, pleaded guilty to five felony counts, including one count of filing a false claim against the government, and four counts of assisting others in submitting false claims, Price said.

The others, who pleaded guilty to single counts of filing a false claim with the government, face up to five years in prison and a $250,000 fine, plus repayment of any loan money received, Price said. Sentencing for all eight who entered guilty pleas is scheduled for late May and early June.

In addition, they have agreed to assist the SBA agents in their ongoing investigation.

The two ringleaders in the case were so-called “loan packagers” who recruited applicants and assisted them in putting together fraudulent applications, according to Price. One of the suspected ringleaders, Faramarz (Frank) Javidzad, 34, of Beverly Hills, pleaded not guilty last month, and his trial is scheduled to begin March 14, Price said. Faraborz Javidzad, 32, the brother of Frank Javidzad and also a suspected ringleader, is believed to have fled the country and could be in Iran, Price said.

Others who pleaded guilty Tuesday are Babak Nehmadi, 23, of Beverly Hills; Behdad Jadidolahi, 28, of Los Angeles; Shahram Aghaee, 34, of Tarzana; Mohammad Javad Kashani Rafye, 47, of Santa Monica; Delnaz Shervanloo, 35, of Beverly Hills; Samuel Dadbin, 39, of West Los Angeles, and Daniel Ahdoot, 43, of Los Angeles.