The mastermind of a years-long fraudulent trademark scam that federal authorities dubbed as " one of the more sophisticated, elaborate, and premeditated operations " they had ever seen has been sentenced to eight years in prison after pleading guilty to fraud.

In addition, on Monday, a federal judge in Los Angeles also sentenced Artashes Darbinyan to pay more than $1.5 million in restitution. US District Judge Stephen V. Wilson additionally ordered that Darbinyan’s two co-conspirators serve 18 and 24 months in prison, with restitution orders ranging from $1.04 to $1.2 million each.

Darbinyan’s scheme involved setting up a company that he called the “Trademark Compliance Office” and another called “Trademark Compliance Center.” Beginning in September 2013, he sent out unsolicited, official-looking (but fake) invoices to over 100,000 unsuspecting businesses. The letter, complete with a return envelope, would ask for a $385 “processing fee” promising trademark registration and monitoring services that did not exist. The return address was one of a few cities in and around Washington, DC. This gave the letter the veneer of legitimacy.

In the end, Darbinyan made over $1.66 million from more 4,400 victims.

Once the checks were deposited, Darbinyan would immediately cash out and use the money to buy gold and make the funds untraceable. That’s according to a superseding indictment filed in July 2016.

The actual addresses were for “virtual office” spaces in Northern Virginia and Washington. Mail sent there was routinely forwarded to another virtual office in Glendale, California, a suburb of Los Angeles. Darbinyan used a fake name, “Iurii Berlach,” with which he also opened up an e-mail account, berlach777@yahoo.com.

According to a sentencing memorandum, Darbinyan only logged in to those accounts on computers that were connected to prepaid wireless modems, and he only used cash-paid burner phones.

Unraveling the threads

By May 2015, the United States Postal Inspector Service began to get involved in the case. At one point, a Post Office employee listened in while Darbinyan (calling himself “Berlach”) called the Arlington, Virginia, virtual office center. The staffer, who had previously warned “Berlach” of complaints about his business, said that he could keep his account so long as the complaints ceased.

What Darbinyan didn’t know was that the USPIS used those call records to figure out that the suspect was using burner phones on H20 Wireless, a prepaid MVNO of AT&T. With no billing records, this was seemingly a dead-end. Authorities then sought and received a geolocation warrant for this phone, but Darbinyan stopped using that handset shortly thereafter.

By September 2015, Darbinyan then called a similar virtual office center in Alexandria, Virginia, with a different phone number. Again, investigators conducted the same ruse, and again they got a warrant for the phone’s location. Based on that, USPIS surveillance teams began pinging the phone and eventually located its user as a man who drove a white Porsche in Glendale. The law began tailing him.

Later that month, Darbinyan called Alexandria to check on his account. While agents in Glendale watched him pull over to make the call, other agents in Alexandria listened in. The voices from the May and September calls were identical.

Two days later, Darbinyan was pulled over by Glendale police for a traffic stop. During the traffic stop, USPIS agents called his phone, and it rang inside his Porsche. Darbinyan was arrested and indicted the next day: September 18, 2015.

In the same sentencing memo, prosecutors said it took “six months of diligent, covert investigative work [to] unravel the defendant’s scheme; at any point, had government agents made a mistake and accidentally apprised the defendant of the investigation into his scam, the defendant would have been able to disappear without a trace.”

Noting that Darbinyan had already been convicted of a mass mailing scam in state court back in 2010, the government asked for a sentence of 188 months, or more than 15 years.

Citing a difficult childhood in Armenia and "chronic substance abuse," Darbinyan’s attorney asked the judge to impose a sentence of five years, or 60 months, in prison. In the end, Darbinyan was sentenced to 96 months.