Owner of Glendale-based ride-sharing company gets more than eight years in prison for pair of frauds
Karen Galstian was awaiting sentencing for his role in a bank fraud scheme when he made the deal with Verizon Wireless about a year and a half ago.
He claimed — falsely — that his Glendale-based rideshare company Toro Ride was poised to expand nationwide, having just received $20 million from investors, and he needed phones for his drivers.
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Under false pretenses, Verizon agreed to sell him more than 30,000 iPhones —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.
However, federal officials said most of the phones were actually sold to companies that resell electronics overseas. More than 11,000 of them were activated in countries such as Vietnam, Iraq, China and Saudi Arabia.
Within six months, Galstian raked in $13 million.
Verizon eventually caught on and stopped doing business with him, according to court records.
This week, the Chatsworth man was sentenced to more than eight years in federal prison for his role in the two schemes, the second of which involved defrauding Bank of America out of $689,000. In January 2014, months before making the deal with Verizon, he pleaded guilty to conspiracy to commit bank fraud in that case.
Last November, he pleaded guilty to one count of wire fraud in connection with the Verizon case.
Galstian’s attorney could not immediately be reached for comment.
According to federal officials, Galstian used some of his profits to pay monthly payments to Verizon, which allowed him to order additional iPhones, as well as to buy several properties, including a penthouse condominium in the Palms Casino in Las Vegas, and a Mercedes-Benz S550.
He also wired roughly $1.5 million to his wife, who used the money to purchase gold nuggets, according to federal court records.
As part of his plea deal, Galstian agreed to forfeit assets obtained through the scheme, including 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, and more than $200,000 in restitution to Bank of America, officials said.
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