“It was a very sophisticated scheme. One recipient was a major criminal involved in organized crime who had been in prison before.” Attorney Mark Geragos, who represents Michael, disagreed with the characterization. “It’s the most disorganized group I’ve ever seen for somebody who is accused of organized crime,” Geragos said. “Obviously, Michael is distraught by the whole thing.” But it’s cases like Michael’s that officials say contribute to the $300 billion a year lost to health care fraud in the U.S. – more than half of it to organized crime – the Daily News found in an 18-month investigation. Authorities say the saga began when Michael immigrated to the U.S. and took a job as a caseworker at the International Community Employment Training Center, which had offices in Glendale and Los Angeles. At the time, the agency contracted with the county to provide job training to indigent immigrants and refugees. From November 2000 to May 2003, Michael issued thousands of checks, reimbursing welfare-to-work recipients for the costs of traveling to jobs and schools. But the checks were frequently sent to incorrect addresses where co-conspirators picked them up and cashed them using false identification, Schmidt wrote in court records. Some of those involved told investigators they split the proceeds with Michael. The scheme unraveled because a bank employee became suspicious when one of Michael’s co-conspirators tried to cash a check, Schmidt said. The Department of Public Social Services investigated and noticed a pattern of fraud. Schmidt testified that Michael forged documents that falsely stated participants were attending school or working. “She was the hub of the wheel from which the illegal actions taken by (International Community Employment Training Center) employees flowed,” Schmidt wrote. Among those who received nearly $163,000 in fraudulent welfare checks was Levon Djaladian, 42, and his wife, Monica Grigoryan, 32, Schmidt said. “He was living in a gated community in a nice home in Sun Valley,” Schmidt said. “He also had very expensive cars. He had many, many bank accounts with his names on them, but he had no legal income that we were aware of.” As part of a nearly four-year sentence, Levon Djaladian was ordered – and has paid – $106,000 in restitution to the county, Schmidt said. Mark Suhr, a senior investigator for the District Attorney’s Office, said the case illustrates that the county’s welfare system can be defrauded relatively easily. “Anybody who works in the welfare system knows there is a lot of fraud going on,” he said. Department of Public Social Services Director Philip Browning said the agency plans to step up its background checks of employees and contractors in response to the case. “How are we going to prevent this in the future?” Browning asked rhetorically. “This is certainly something we can learn from. That’s not to say there won’t ever be another case.” Schmidt said welfare fraud is a systemic problem in the county. “It’s like putting kids in the candy store,” Schmidt said. “Without the shop owners there, they will eat the candy. Organized crime is going to be involved any time they can find opportunities and a vulnerable organization.” [email protected] (213) 974-8985160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Lana Michael and her husband collected welfare benefits in 2003, claiming they earned less than $24,000. But authorities say Michael, the former office manager of a job-training center for immigrant welfare recipients, also owned a liquor store and recycling business. And, authorities say, she drove a $76,000 luxury car, shopped at Neiman Marcus and Saks Fifth Avenue and had $147,980 stashed in her bedroom dresser. “She was living a very lavish lifestyle,” Deputy District Attorney Juliet Schmidt said. “She went on trips to Europe. She was driving a brand-new BMW 740 IL.” Lana Michael, 34, also known as Svetlana Djangarian, is scheduled to be sentenced June 8 in what authorities say was a $1 million fraud targeting welfare-to-work programs. In exchange for pleading guilty to misappropriating public funds and filing false tax returns, she is expected to be ordered to spend nearly four years in prison and pay $351,967 in restitution. “This brings to a close a tremendous fraud perpetrated by truly greedy people against a county-administered public benefit program,” District Attorney Steve Cooley said. Michael’s husband and 15 other people also have pleaded guilty to misappropriating public funds and tax evasion. Each has been sentenced to up to four years in prison. “They were originally welfare recipients getting services. Then some became workers and began to issue county warrants (checks) on the computers to themselves, family members and friends,” Schmidt said.