Three people arrested yesterday have been accused of bilking a bank out of $750,000 and running a network of shady businesses with the infusion of millions of dollars of capital from Mexico.
The crimes spanned the last decade, police say, and included businesses that would be familiar to many readers, including:
* CBNC, the Scottsdale nightclub at McDowell and Scottsdale roads, which closed in 2007.
* Scorch Club at Desert Ridge. Problems with code violations targeted
by authorities in 2008, as detailed in an Arizona Republic article at
the time, apparently led to the arrests.
*Exotic Auto Sales and Leasing, and Scottsdale Lotus, both in Scottsdale. Eric Edenholm, the current owner of Scottsdale Lotus, tells New Times that one of the suspects owned the company for about four months in 2001.
The former owner, Nazreth Derboghossian, 50, of Phoenix, is now accused of 102 felony counts, including conspiracy, fraudulent schemes, assisting in a criminal syndicate, theft by extortion, and other crimes, according to court documents.
Katie Marie Peters, 28, of Glendale, is potentially on the hook for 21 felony counts related to the alleged schemes, such as conspiracy, money-laundering, forgery, and fraud, and Mario de la Fuente Mix, of Nogales, Mexico, is accused of 13 similar felony counts.
The court records also name a fourth defendant, Jodi Upton, who apparently hasn't yet been apprehended or charged.
** Update -- See our 2012 in-depth article on this case, "Fast Cars and Rap Stars..." **
Derboghossian's in the United States on a work visa, but court records don't say where he's from.
According to the aforementioned Repub article, Phoenix officials became suspicious of the Scorch Bar when it requested a special permit for a Super Bowl party in late 2007. Authorities scrutinized the liquor license and found that:
...the license applicant, Katie Peters, had no prior experience managing or controlling an establishment with a liquor license and has not attended a required training course.
In a search of Arizona Corporation Commission records, police also found a second company that claimed to own Scorch Bar.
The agent for the second company is named Bassam Nahas, and a police background check found he had a criminal history in drug trafficking.
Police now allege the bar was funded in part by millions of dollars funneled from Mexico.
The group's scams appear to have begun in May 2001, court records state. While owners of Scottsdale Lotus, the suspects took out $750,000 in loans to buy vehicles later sold. The loans weren't paid back, police allege.
Profits were mixed with an unspecified amount of income wired to the United States from two unnamed Mexican nationals.
"That money was used to purchase and operate a second car dealership, Exotic Auto Sales and Leasing, where the financial ownership and directing control was again concealed from the state through false filings," records state. "While operating as Exotic Auto ... defendants funneled approximately $16 million from Mexico into the bank account."
The suspects then allegedly used the funds to run CBNC and Scorch Bar. "Additional undisclosed financial investors were brought in as partners," records state.
Heck, we even gave Club CBNC the "Best Club for Hip-Hop" award in 2005. Here's an excerpt:
50 Cent did his two-step on the bar. Britney mingled with the regular folks on the dance floor. LL Cool J sat in the exclusive "Owner's Booth" and signed autographs for fans. And such hip-hop/R&B royalty as Eve, Busta Rhymes, Missy Elliott, Beyoncé, and Alicia Keys have all gotten their groove on here. This is why CBNC is legendary in the Valley, because the club brings in the big names, due in no small part to owner Jodi Upton. Through her luxury car dealership, Scottsdale's Exotic Auto Sales, and her friendship with rap producer Swizz Beatz, godfather of one of her sons, she knows everyone worth knowing in hip-hop.
The defendants later opened RPM Ultra Club and Lounge at 2040 North Scottsdale Road. The liquor license for that club, as with the others, was acquired with money laundered through the car dealership, "and ownership was again concealed through false filings."
Authorities claim their case is based in part on self-incriminating statements made by all three suspects.
This is just the latest legal problem for Derboghossian, who was accused of grand-theft auto in 1991 after a $150,000 Ferrari Testerossa somehow ended up at a sports-car dealership he owned in Florida. The old Miami Herald article says Derboghossian, then 31, was one of the owners of Euromotorcars in Fort Lauderdale when:
...a LoJack auto- theft homing device led officers to Derboghossian's garage, police said.
They said they found the stolen sports car on a lift inside the dealership.
Police Sgt. David Ecklund said Derboghossian told detectives that a customer had dropped off the car, but said he didn't know the man's last name or how to get in touch with him.
Court records state that Derboghossian is a fugitive from a charge of fraud in Virginia and vehicle theft in Florida. He was picked up yesterday at his home at 18212 North 19th Street in Phoenix. Cops found Peters at her Glendale home. Police caught Mix at a home in Nogales, Arizona.
Records from the Arizona Corporation Commission show that Jodi Upton was the statutory agent for Exotic Auto Sales and Leasing, LLC, and that Douglas Allen of Phoenix was the company's principal member. Allen also shows up in a corporate listing published in the Arizona Republic in 2007 for Club RPM LLC. We left a message for Allen at Exotic Auto but haven't heard back yet.
It seems like there's more to this story, such as where those million of dollars from Mexico came from originally. When we find out, you'll be the first to know.
UPDATE 6:15 PM -- Just found an old Arizona Republic article posted online that describes Derboghossian and Upton as a couple and describes their "business acumen." Here's a sample:
The couple's auto dealership, specializing in Lamborghinis, Ferraris and custom Mercedes-Benzes, also has built up an impressive list of customers, including Mike Bibby, Penny Hardaway, Jake Plummer, Tony Womack and Simeon Rice.
But one customer in particular has helped Upton and Derboghossian take their business ventures into elite territory. That would be Swizz Beatz, noted hip-hop producer, songwriter and deejay.
Swizz Beatz said he visited Arizona a few years ago to produce tracks for rapper DMX, ended up liking it here and met Upton and Derboghossian when he bought a Lamborghini from them.
Since then, he has bought or traded 25 cars through the dealership. He is godfather to the couple's 8-month-old son, Nubar. And he has brought many of his friends and associates from the music business into the nightclub.
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The article also describes "Naz's" rise in the exotic automobile world starting in Florida, and Upton's humble beginnings:
"Seven years ago, I was homeless, pregnant and living in a battered women's shelter," she said.
Upton packed up her belongings four years ago and left Massachusetts with her then 2-year-old son and ended up in the Valley because her girlfriend's brother lived here. She got a job in the front office of an auto repair shop.
Derboghossian, meanwhile, had grown up around cars. His Armenian father introduced him to vintage Ferraris and racing cars, letting young Naz fix them at age 10. It became his passion. By the time he was 25, he had left south Florida for Virginia and gotten his first high-profile customer, kickboxing champion Rick Rufus. Rufus asked Derboghossian to manage him as a boxer. Though he knew little about being a boxing manager, he said yes.