GLENDALE / BURBANK : Three Plead Guilty in Scam to Avoid Fuel Excise Tax

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.

The men were arrested in August following 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” the fuel with diesel fuel at service stations and truck stops, then selling the mixture without paying the full excise tax, said Deputy U.S. Atty. Stephen Larson.

The three men will be sentenced early next year. Larson said Keroles has agreed to serve at least 41 months in prison and to 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. They also 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 following a yearlong investigation in North Hollywood.

In that case, agents set up a fuel business in Burbank to flush out rings believed responsible for cheating the state and federal governments out of millions of dollars.

Among the defendants in the North Hollywood sting is Hovsep Mikaelian, 44, accused of masterminding an operation that allegedly supplied two dozen gas stations and truck stops with fuel that went untaxed because it was supposedly sold for use in agricultural vehicles. His trial has not yet been scheduled, Larson said.