LAS VEGAS -- Federal authorities Thursday morning arrested the owner and eight employees of the CLS Transportation limousine service in Las Vegas following their indictment on federal racketeering, drug, prostitution and fraud charges, Nevada's U.S. Attorney Daniel Bogden said.
Those arrested included CLS owner Charles Horky, 52, CLS manager Kimberly Flores, 42, financial advisor Archie Granata, 69, limousine drivers Dawit Moszagi, 47, Clarence Adams, 38, James Reda, 38, and Mikhail Maleev, 48, and CLS associates Solomon Zemedhun, 39, and Olive Toli, 48. All are from Las Vegas except for Granata, who resides in Reno.
They were charged with conspiring to participate in an enterprise through a pattern of racketeering activities including wire fraud, access device fraud, bank fraud, distribution of controlled substances, and the use of interstate commerce to facilitate and distribute proceeds of prostitution.
Appearing before federal Magistrate Judge George Foley Jr. Thursday evening, Horky, Flores, Reda, Adams and Zemedhun pleaded not guilty to the charges and were released. They had to turn over their passports and their travel has been restricted. Horky is limited to traveling in California and Nevada, and also has 72 hours to turn over a dozen firearms. Flores was restricted to traveling in the United States. Adams, a former professional boxer, is restricted to Nevada.
The judge also allowed Horky and Flores to return to work, but they will have court-appointed attorney Timothy Cory of Las Vegas overseeing the company's operations and checking its finances on a weekly basis. The trial date for those released is Feb. 12.
Maleev and Toli also pleaded not guilty but were kept in custody. The other two defendants, Granata and Moszagi, did not appear in court.
According to the indictment returned by the grand jury on Nov. 27 and unsealed Thursday, the defendants are accused of using CLS between September 2008 and last month to facilitate a broad range of criminal activity. Horky allegedly directed the activity and required drivers to pay him a cut of the money they received from criminal enterprises.
In addition to the distribution of drugs and facilitation of prostitution, CLS allegedly offered limousines for hire to customers who paid with credit cards. The defendants allegedly defrauded American Express and its card holders of more than $2.8 million through fraudulent and unauthorized charges.
Horky, Flores and Granata also allegedly devised a check-kiting scheme in which they drew checks on the CLS payroll account knowing it didn't contain sufficient funds. The indictment alleged that in 2010 alone, the conspirators issued and cashed more than 1,500 checks and obtained more than $2.4 million through check-kiting.
The case is being investigated by the FBI and Metro Police and is being prosecuted by Assistant U.S. Attorney Timothy Vasquez. There is also a second related indictment that involves illicit drug distribution.
"Persons who use legitimate businesses to shield their criminal activities will get the attention of law enforcement," Bogden said. "In addition to promoting prostitution and selling drugs, these defendants are accused of defrauding customers, many of whom were undoubtedly tourists to Las Vegas."
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