The owner of a Glendale-based ride-sharing business was sentenced on March 21 in federal court to more than eight years in prison in two separate fraud cases, including one involving the sale of more than 30,000 Apple iPhones fraudulently obtained from Verizon Wireless at substantially discounted prices.

Karen “Kevin” Galstian, 38, was sentenced by U.S. District Judge Barry Ted Moskowitz to 100 months in prison for the scheme targeting Verizon Wireless. The fraud generated illegal profits of more than $13 million. Galstian was also sentenced to 87 months in prison for defrauding Bank of America out of nearly $700,000. The sentences are to run concurrently.

Moskowitz also ordered Galstian to pay $17 million in restitution to Verizon and more than $200,000 in restitution to Bank of America.

The defendant pleaded guilty in November to one count of wire fraud, admitting that he committed the offense while on pre-trial release in the case involving Bank of America. In that case, Galstian pleaded guilty in January 2014 to bank fraud.

“This defendant persisted in a multi-million dollar fraud scheme even while preparing to go to prison,” said United States Attorney Eileen M. Decker. “[The] significant sentence and forfeiting the proceeds of his scheme may be the only meaningful deterrents to this defendant’s criminal conduct.”

As part of the scheme involving the iPhones, Galstian admitted that he used his company, Toro Ride, Inc., to persuade Verizon Wireless to provide more than 30,000 iPhones at a substantial discount. He purchased most of the mobile phones – which usually sell for more than $500 – for 99 cents each under a two-year contract.

Galstian claimed that the phones would be used by drivers for Toro Ride’s ride-sharing service and that Toro Ride, which had only been operating in the Los Angeles area, was poised to expand nationwide. Galstian falsely told Verizon that Toro Ride had received $20 million from investors. When he brokered the deal with Verizon last year, Galstian failed to disclose that he was awaiting sentencing in the bank fraud case and thus would be incarcerated and unavailable to lead the company in the expansion.

As Verizon provided the iPhones that supposedly would be used by Toro Ride’s drivers, Galstian sold the majority of the devices to companies engaged in the international re-sale of consumer electronics. Thousands of the iPhones that Verizon intended for Toro Ride were instead activated in countries such as Vietnam, Iraq, China and Saudi Arabia.

Galstian fraudulently convinced Verizon to provide him with iPhones worth more than $19.4 million. In less than six months, Galstian generated illegal proceeds of more than $13 million by re-selling the iPhones.

Toro Ride used some of the illicit proceeds derived from iPhone sales to make required monthly payments to Verizon, which enabled Galstian to continue to order thousands of additional iPhones.