3 Plead Guilty to Bilking Government Out of Fuel Taxes

Three defendants have pleaded guilty in federal court to tax fraud, mail fraud and other charges stemming from a diesel fuel excise tax evasion scam that involved 23 arrests and stretched from the San Fernando Valley to Long Beach, federal prosecutors said.

Manouk Isahak Nalchian of Glendale, Youssef Kamel Keroles of San Pedro and Andranik Dzhrdzhyan of Los Angeles entered guilty pleas Wednesday to various charges before Judge James M. Ideman in U.S. District Court in Los Angeles.

Nalchian, Keroles and Dzhrdzhyan were arrested in August after a joint investigation by the Internal Revenue Service and the FBI into diesel fuel scams and related criminal activities. They were accused of buying large quantities of jet fuel, blending or “cocktailing” it with diesel fuel at service stations and truck stops, then selling the mixture to customers without paying the full excise tax, Deputy U.S. Atty. Stephen Larson said.

The three will be sentenced early next year. Larson said Keroles has agreed to serve at least 41 months in prison, pay a $45,000 fine and nearly $2 million in back taxes to the state and the IRS. The other two men will pay about $182,000 in fines and restitution and face possible prison terms.

So far, six defendants in the case have pleaded guilty. Still awaiting trial in federal court are 17 more defendants, including 13 people arrested in September after a yearlong joint FBI and IRS investigation in North Hollywood. In that operation, agents set up a fuel business in Burbank to flush out rings believed responsible for cheating the state and federal government out of millions of dollars.