The 37-year-old owner of Glendale-based ride-sharing company Toro Ride pleaded guilty Wednesday to a fraud scheme that included selling more than 30,000 iPhones he bought from Verizon for 99 cents each after claiming they’d be used by his drivers, allowing him to rake in more than $13 million, federal officials said.
Karen “Kevin” Galstian, of Chatsworth, admitted to using his company to swindle Verizon into selling him thousands of phones — which typically sell for more than $500 each — for 99 cents each in connection with a two-year contract, according to the U.S. Attorney’s office.
He reportedly claimed that the phones would be used by drivers for Toro Ride, which he falsely claimed received $20 million from investors and was slated to expand nationwide.
Galstian reportedly failed to tell Verizon that he was awaiting sentencing ina bank fraud case, and would not be able to lead the company’s expansion.
In less than six months, Galstian reportedly made more than $13 million by selling the iPhones to companies that resell electronics internationally, with the phones being activated in Vietnam, Iraq, China and Saudi Arabia.
He used some of his profits to pay monthly payments to Verizon, allowing him to order thousands of additional iPhones, and to buy several properties, including a penthouse condominium in the Palms Casino in Las Vegas.
Galstian pleaded guilty to one count of wire fraud and is slated to be sentenced for both cases in January.
As part of the deal, Galstian agreed to forfeit assets obtained through the scheme, including a number of vehicles as well as properties in Northridge, Sherman Oaks, Tujunga and Las Vegas.
The agreement also calls for him to pay $17 million in restitution to Verizon, which gave him more than $19.4 million worth of phones, officials said.
Alene Tchekmedyian, email@example.com