Top lawmakers demand investigation of corruption in Armenian genocide victim payments
Matt Hamilton, Harriet Ryan,
They were bayoneted in their homes. Drowned in the Black Sea. Shot. Tortured in front of crowds. Forced to convert. Forced into prostitution. Burned alive. Poisoned. Driven into the desert to die of thirst. Their bodies were thrown in pits, torched, eaten by dogs, and picked over by vultures.
By many estimates, a million Armenians died in the Ottoman Empire between 1915 and 1920, one of the first genocides in a century that would be defined by mass killings. Ignored by most of the world and denied by the Turkish government, the Armenian slaughter was considered for generations a “perfect genocide,” its victims are forgotten, its perpetrators unpunished.
Then, in the mid-2000s, court cases in Los Angeles, home to one of the largest Armenian communities outside Armenia, delivered a measure of justice that history had long denied. Three Armenian American attorneys sued to collect life insurance policies on victims of the genocide and came away with a pair of class-action settlements totaling $37.5 million. Finally, in an American courtroom, the genocide was treated as fact.
In the decade that followed, however, the much-hoped-for reparations devolved into a corrupted process marked by diverted funds and misconduct that even the lawyers involved characterized as fraud, The Times found in an investigation that drew on newly unsealed case filings, other court documents, official records, and interviews.
More than $1.1 million in a settlement with a French insurer was directed at various points to sham claimants and bank accounts controlled by a Beverly Hills attorney with no official role in that case, according to court filings and financial records. A French foundation that was supposed to distribute millions in settlement funds to charity was never set up, and some $1 million of that money ended up at Loyola Law School, the alma mater of two attorneys in the case, according to an accounting provided by the school.
In addition, Christian churches that were supposed to get hundreds of thousands of dollars in settlement funds told The Times that they did not receive the money.
Armenians who stepped forward to collect on ancestors’ policies in the settlement with the French insurer had their claims rejected at an astonishing rate of 92%, court records show. Applicants were denied despite offering convincing evidence such as century-old insurance records, birth certificates, ship manifests, hand-drawn family trees and copies of heirloom Bibles.
“It was for us blood money — the blood of the people killed in the genocide,” said Samuel Shnorhokian, a retired French businessman who served on a court-approved settlement board and has tried for years to persuade the FBI and other agencies to investigate. “We never thought there would be a misappropriation of funds.”
The insurance settlements had their origin in the bedtime reading of a Glendale lawyer named Vartkes Yeghiayan. It was 1986, and many Armenian Americans were worried about keeping the memory of the genocide alive. Few Americans had heard of the massacres, and then-President Reagan refused to even support a day of commemoration for fear of angering Cold War allies in Turkey.
Yeghiayan, the son of a genocide survivor, was plodding one night through the memoirs of a former U.S. ambassador to the Ottoman Empire when he stumbled on a passage about victims’ life insurance policies.
Ambassador Henry Morgenthau Sr. wrote that in the middle of the slaughter, the Turkish interior minister had demanded a list of Armenians with American life insurance, saying, “They are practically all dead…. The government is the beneficiary now.”
At home in Glendale, Yeghiayan leapt up, as he later recalled in speeches and interviews, exclaiming, “There is a list! We have to find this list!”
He spent much of the next 13 years researching the policies. He placed ads in Armenian newspapers seeking families who held on to ancestors’ insurance documents, and combed through archives in Washington; Geneva; Aleppo, Syria, and elsewhere. He found a 1919 letter in which a lawyer for New York Life estimated the potential cost of the mass killings of Armenian customers at $7 million, a sum equal to more than $100 million in today’s dollars. Yeghiayan believed the carrier had not paid the victims’ heirs.
He came to see collecting those policies as a way not only to compensate families but also to establish the genocide as beyond dispute. In those years, his quest for justice was lonely and low-budget. At one point, Yeghiayan used the Glendale Public Library to print 594 pages of microfiche records, feeding dime after dime into the machine. His already modest law practice suffered. He fell behind on his taxes and filed for bankruptcy.
Finally in 1999, Yeghiayan had enough evidence for a lawsuit against New York Life. Three years later, he sued the French insurance giant AXA.
Facing down global corporations with squadrons of well-paid attorneys, Yeghiayan recognized he needed a legal gun of his own.
Mark Geragos was then a rising star in L.A. law. He practiced mainly criminal defense at his family’s downtown firm, and he had attracted national press representing Clinton family associate Susan McDougal during the Whitewater investigation. In the years that followed, he amassed a clientele that kept him in the spotlight, including Winona Ryder, Michael Jackson and murderer Scott Peterson.
At Yeghiayan’s invitation, Geragos signed on to the insurance litigation in 2001. The team already included up-and-coming class-action lawyer Brian Kabateck, who would go on to become a prominent plaintiff’s attorney and president of the L.A. County Bar Assn.
The three attorneys were Armenian Americans, part of a proud and active L.A. ethnic group of more than 200,000, and the genocide cases offered them an attractive combination of community service and financial gain. When the insurers agreed to pay — New York Life, $20 million in 2004; and AXA, $17.5 million a year later — more than $7 million went to legal fees and associated costs, court records show.
Both settlements mandated that the lion’s share of the money would go to individuals who could produce evidence they were descendants of the Armenian policyholders. Beyond that, charities serving the Armenian community would get $3 million, along with whatever money was left over after paying descendants.
The New York Life case ran smoothly with a committee of prominent L.A. Armenians appointed by the state insurance commissioner, including current City Councilman Paul Krekorian, vetting applications. People submitted government records and accounts of how relatives perished and survivors rebuilt lives in Fresno; Yerevan,
Armenia; Marseille, France; Beirut and elsewhere. One family sent a piece of fabric from the tent their grandmother had slept in after being marched into the desert to die. Another shared a photo of its patriarch standing in front of his sewing machine shop in Harput in the Ottoman Empire, in a region of modern-day Turkey.
Ultimately, the committee approved 44% of claims, according to a news release.
It was in the second case that red flags emerged. That settlement, with Paris-based insurer AXA, designated up to $11.35 million for descendants. Decisions about whether applications were legitimate or not were to be made by a board of three prominent French Armenians, according to the settlement terms and court filings.
Months before the French board’s appointment, the attorneys — Kabateck, Yeghiayan and Geragos — established important parts of the approval process in Los Angeles, according to court records and lawyers’ emails later turned over to authorities.
They installed as settlement administrator — the coordinator of the claims process —a courtroom interpreter from Glendale who had helped run the New York Life settlement. They instructed him to hire staff and set up operations in downtown L.A., in the same Wilshire Boulevard office used for the New York Life case.
The arrangement put the process of deciding who got money 6,000 miles from Paris, making it difficult for the French board to provide any meaningful oversight.
“The fact we were in France, we didn’t know how they were working and what they were doing,” said Shnorhokian, the board member and retired Parisian executive.
“It was practically impossible,” said board member Jean-Charles Zaven Gabrielian, a surgeon in Marseille. The board did not object to the process or to the selection of the settlement administrator because, as Gabrielian explained: “I trusted them.”
An email Kabateck wrote to the two other lawyers in 2008 suggests they saw a particular benefit in preserving that trust: “It is important to keep good feelings from the board; it will be easier later to persuade them to be conservative on their claims decisions.”
As it turned out, the process set up in L.A. resulted in a tiny fraction of applicants receiving money and a pool of cash left over.
The Times requested interviews with Geragos and Kabateck about the litigation; Yeghiayan died in 2017. Neither attorney agreed to speak with reporters, but each provided written responses.
Shant Karnikian, a law partner of Kabateck, said in a letter to The Times that the instances of fraud that emerged later in the handling of money were a result of the actions of others, including the settlement administrator and another attorney.
Asked about the email referencing a need for the board to be “conservative,” Karnikian said the attorneys wanted to ensure claims were “not just unconditionally rubber-stamped” for approval.
“Class counsel worried about unsubstantiated (and potentially false) claims being liberally approved thus reducing the overall amount left for legitimate substantiated claims,” Karnikian wrote.
Read more in detail on: https://www.latimes.com/california/story/2022-03-23/fraud-los-angeles-cheated-armenian-genocide-victims
This story originally appeared in Los Angeles Times.