UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION

INVESTMENT ADVISERS ACT OF 1940
Release No. 2227/April 16, 2004

ADMINISTRATIVE PROCEEDING
File No. 3-11432

The Securities and Exchange Commission (Commission) issued its Order Instituting Proceedings (OIP) on March 16, 2004, pursuant to Section 203(f) of the Investment Advisers Act of 1940 (Advisers Act). Respondent Michael Garian (Garian), a/k/a Melkon Gharakhanian, a/k/a Bika Balian, received the OIP on March 23, 2004.

Under Paragraph IV of the OIP and Rule 220(b) of the Commission's Rules of Practice, Garian's Answer to the OIP was due by April 12, 2004. No Answer has been received. Accordingly, Garian is in default within the meaning of Rules 155(a)(2) and 220(f) of the Commission's Rules of Practice.

As authorized by Rule 155(a) of the Commission's Rules of Practice, I find the following allegations of the OIP to be true:

Garian, age 41, resides in Van Nuys, California. Garian was the founder and chief executive officer of National Investment Enterprises, Inc. (NIE). From March 1997 until NIE's collapse in 2001, Garian acted as an investment adviser. During the relevant period, Garian was associated with NIE, which also acted as an investment adviser.

On February 5, 2003, the Commission filed a complaint in the United States District Court for the Central District of California, entitled SEC v. National Investment Enterprises, Inc., Case No. CV 03-0896 (DSF) (JWJx).

The complaint alleged that Garian and NIE perpetrated an affinity fraud upon members of the Armenian-American community. Between 1997 and mid-2001, Garian and NIE sold interests in an investment pool, raising over $20 million from about 200 investors, at least one of whom was located out of state. Garian told investors that, at his discretion, he would use their money to purchase various securities for their accounts.

The complaint also alleged that, to bring new investors into NIE, Garian falsely represented that he had an "inside line" to upcoming "hot" initial public offerings (IPOs), particularly for Internet and other technology-related companies, and could deliver large profits to investors quickly. Moreover, Garian and NIE sent investors monthly statements that falsely represented that NIE was purchasing large volumes of IPO shares and other securities, and that NIE was making profits from Garian's trading activities. Garian used a little more than one-fourth of the money raised on investments in IPOs, day trading, and commodity trading. Of the $5.36 million Garian actually invested, he lost all but $2.3 million. Most of the investor funds ($13.4 million) were used to fund investor withdrawals so that Garian and NIE could continue to run a Ponzi-like scheme. By the beginning of 2001, Garian's unsuccessful investments combined with investor withdrawals resulted in the depletion of NIE's investor funds, and caused NIE to bounce several checks to investors.

On February 12, 2004, the district court granted the Commission's motion for summary judgment against Garian and entered a judgment of permanent injunction on all claims in the Commission's complaint. The judgment enjoins Garian from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act.

In view of the above, I find that remedial action is appropriate in the public interest and that Garian should be barred from association with any investment adviser.

IT IS ORDERED THAT, pursuant to Section 203(f) of the Investment Advisers Act of 1940, Michael Garian, a/k/a Melkon Gharakhanian, a/k/a Bika Balian, is barred from association with any investment adviser.

http://www.sec.gov/litigation/admin/ia-2227.htm