SAN DIEGO—The owner of a Glendale-based ride-sharing business pleaded guilty this afternoon to federal wire fraud charges, admitting that he illegally generated over $13 million in profits by selling more than 30,000 Apple iPhones fraudulently obtained from Verizon Wireless at substantially discounted prices.

Karen “Kevin” Galstian, 37, of Chatsworth, pleaded guilty today in United States District Court in San Diego to one count of wire fraud, and he admitted committing the offense while on pre-trial release in another case filed by prosecutors in San Diego.

Galstian pleaded guilty today in San Diego, where federal prosecutors in the United States Attorney’s office previously obtained a guilty plea in a bank fraud case. Pursuant to a plea agreement in the iPhone case, Galstian will be sentenced in both cases by United States District Judge Barry Ted Moskowitz. Today, Judge Moskowitz scheduled a sentencing hearing for January 11, 2016.

The plea agreement calls for a 100-month sentence on the combined cases.

As part of the scheme involving the iPhones, Galstian admitted that he used his company, Toro Ride, Inc., to induce Verizon Wireless to provide the business with more than 30,000 iPhones at a substantial discount. He purchased most of the mobile phones that usually sell for more than $500 for only 99 cents each – in connection with a two-year contract. Galstian claimed that the phones would be used by drivers for Toro Ride’s ride-sharing service (a service similar to Uber and Lyft) 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 the 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 vast majority of the devices to companies engaged in the international re-sale of consumer electronics. Thousands of the iPhones that Verizon shipped to Toro Ride were never used on its network and instead were 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. The plea agreement calls for the defendant to pay $17 million in restitution to Verizon.

Galstian used approximately $2.5 million of the fraud proceeds to purchase several properties, including a penthouse condominium in the Palms Casino in Las Vegas, and a Mercedes S550. In conjunction with today’s guilty plea, Galstian agreed to forfeit assets related to and obtained through the fraud scheme, including real properties in Northridge, Sherman Oaks, Tujunga and Las Vegas, as well as more than $200,000 seized from bank accounts and a number of vehicles.

The investigation into Galstian’s wire scheme was conducted by the Federal Bureau of Investigation.