Soliciting $1M Investment For Porn Sites, Man Spends Cash On Shopping Spree Instead: DOJ

LOS ANGELES, CA — A Los Angeles County man who said he ran pornographic webcam sites pleaded guilty on Monday to defrauding investors out of over $1 million as part of a scheme that saw him spend the money not on the operation of the websites, but on luxury shopping sprees and gambling, according to the U.S. Attorney's Office.

Patrick Khalafian, 54, of Montrose, pleaded guilty in U.S. District Court to one count of wire fraud. He's due back in court in February, where he faces a sentence of up to 20 years in federal prison.

Khalafian between 2009 and 2016 solicited investment for businesses including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC, which he claimed developed and operated adult entertainment sites, according to prosecutors.

Khalafian told investors their capital would be used for business operations and promised victims they would be repaid by a specific date, that they would receive ownership interests in the companies and would receive a share of the profits, prosectors said.

In one instance, he met a victim in 2015 at Mastro’s Steakhouse in Beverly Hills, where he secured a $1 million investment from the victim, prosecutors said.

On the day he received the funds, Khalafian transferred $200,000 of the money to another account to pay his rent, for luxury cars and other expenses. The next day, he used $66,000 of the victim's money to purchase a new Ford F-150. He used more than $100,000 to pay another investor, to pay his rent, and for shopping sprees at Tiffany, Barney’s, Fendi, Saks Fifth Avenue and Louis Vuitton, prosecutors said.

Khalafian never paid the victim back and stopped responding to the victim's messages over a year later. Khalafian at one point disconnected his phone number and changed his email address to evade investors' inquiries, prosecutors said.

Khalafian also admitted to conning two other victims in 2015 and 2016 out of $80,000 and $90,000 and using their money on personal expenses, prosecutors said.

Khalafian's fraud cost victims at least $1.17 million total, prosecutors said.