LOS ANGELES — A Los Angeles-area man pleaded guilty on Monday to defrauding investors out of more than $1 million “by making false promises that they would receive an ownership interest in several adult entertainment webcam websites and then using their money on personal expenses, including luxury items,” according to the Department of Justice.

As XBIZ reported, Montrose resident Patrick Khalafian was arrested in 2020 following an FBI investigation and a federal grand jury indictment alleging the fraudulent scheme.

Khalafian pleaded guilty to one count of wire fraud, the DoJ said through a statement. According to his plea agreement, “from November 2009 to October 2016, Khalafian solicited investments for businesses — including 168 Entertainment LLC, Empire Entertainment Group Inc., and EEG LLC —that purportedly developed and operated adult entertainment websites.”

Khalafian, the statement continues, “falsely represented to victims that their investments would be used for business operations, including developing software and the platform for the proposed websites, paying for computer servers, hiring employees, and purchasing advertising. He also falsely promised that the victims would be repaid for their investments by a specific date, that they would receive ownership interests in the companies, and would receive a share of the companies’ profits.”

Instead, Khalafian used the funds “to pay off his debts, including to prior victims, and to fund his own lifestyle, including to pay for gambling expenses and luxury shopping sprees.”

The DoJ also noted that Khalafian “lied to his victims about the status of the adult entertainment websites purportedly being developed by the companies in which they had invested. Khalafian eventually stopped responding to victims and disconnected and changed his phone number and email address to evade their inquiries.”