US to seize mansion linked to Armenian ‘super minister’ Gagik Khachatryan

By Mark Dovich

The United States will seize a Los Angeles mansion belonging to the family of former Armenian official Gagik Khachatryan and may transfer to the Armenian government some of the proceeds from the property’s planned sale, the Justice Department has announced.

Federal prosecutors allege the Khachatryans bought the more than 30,000-square-foot estate in LA’s upscale Holmby Hills neighborhood with millions of dollars of bribes from an Armenian businessman.

The agency said in a press release Monday it had reached a settlement agreement in the two-year civil forfeiture case, allowing it to take over the property, which was listed for sale most recently for $63.5 million.

The U.S. government now plans to sell the property “at the highest obtainable market price and retain 85% of the net proceeds of the sale,” with the remaining money set aside for the Khachatryan family.

The money Washington makes may then be handed over to Yerevan, according to federal rules allowing transfers when a foreign country is involved in efforts to seize a U.S. property.

“The offices that brought the case intend to recommend transfer of some or all of the forfeited proceeds to the Republic of Armenia,” the Justice Department said, noting that “Armenian investigative authorities also provided critical assistance.”

There was no timeline for that made immediately available.

What’s the background?

The 11-bedroom, 27-bathroom mansion was purchased in 2011 by a trust benefiting Khachatryan’s sons with loans provided by Sedrak Arustamyan, an Armenian businessman with known links to Gagik Tsarukyan, a prominent oligarch.

The U.S. government alleges those loans, which topped $22 million, were covers for bribe payments meant to ensure favorable treatment of Tsarukyan’s businesses by Khachatryan, who served at the time as Armenia’s tax chief and later as the country’s finance minister.

Khachatryan, who is known in Armenia as the “super minister” in reference to his broad powers when he served in government, also faces criminal prosecution in Armenia on charges of abuse of power, bribe taking, embezzlement, and money laundering. His sons, Artyom and Gurgen, are also facing money laundering charges.

The property forfeiture was sought under the Justice Department’s Kleptocracy Asset Recovery Initiative, which works to recover the proceeds of foreign official corruption by seizing assets in the United States or otherwise connected with the U.S. financial system.

What’s been the reaction in Armenia?

Armenia’s Prosecutor General’s Office welcomed in a statement Monday what it called “effective cooperation” with the Justice Department and confirmed it is in talks to receive “the majority of funds received as a result of the sale of the mansion.”

Meanwhile, lawyers for the Khachatryans decried the Justice Department’s probe as the result of an “apparently politically motivated referral from the Armenian government,” but still claimed the settlement “represents a significant victory” for the family.

“DOJ closed its investigation and specifically noted that there were ‘no other ongoing criminal investigations into [the Khachatryans] at this time.’ With the DOJ investigation closed and the stay of the forfeiture case set to be lifted, DOJ and the Khachatryans also agreed to settle their outstanding forfeiture claims,” Vinson & Elkins, a Houston-based international law firm, said in a press release Tuesday.

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