X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Lawyers Mark Geragos and Brian Kabateck have filed a lawsuit against their former co-counsel in two class actions involving life insurance claims for victims of the Armenian genocide, alleging that he fraudulently funneled settlement funds to sham charities. In a suit filed on March 11, Geragos and Kabateck alleged that Vartkes Yeghiayan and Rita Mahdessian, a married couple who both work at Yeghiayan Law Corp. in Glendale, Calif., swindled $1 million from the plaintiffs. The dispute involved the lawsuits against New York Life Insurance Co. and French life insurance firm Axa S.A. on behalf of family members of victims of the Armenian genocide seeking life insurance payments. The genocide killed 1.5 million people between 1915 and 1923. Specifically, Yeghiayan, who was co-counsel with Geragos and Kabateck in both cases, allegedly created sham charity organizations that received cy pres payments from leftover settlement funds. “I can’t imagine how anybody thinks that this is something that’s appropriate,” said Geragos of the Law Offices of Geragos & Geragos in Los Angeles. “To me, it’s radically unethical and illegal. And so obviously it’s not something we condone.” Suing his former co-counsel is “not something we enjoy doing, obviously, but I think we got an obligation ethically and morally to deal with and to try to remedy it. “ Yeghiayan fired back, saying that Kabateck and Geragos filed the suit after a board of volunteers overseeing the Axa fund began requesting an accounting. Kabateck and Geragos filed court documents on March 8 asking that the fund be closed down and the board disbanded. Yeghiayan filed a court document on March 10 expressing his intent to oppose the move, citing the “direct conflict” that decision would have on the interests of the board members. “There’s absolutely no merit in what they’re saying, and we’ll answer when we file an answer. They will see our point of view,” he said. “I want to say that this is in retaliation for a number of things that I’ve done to them. And this is how they get back to me.” Kabateck, of Kabateck Brown Kellner in Los Angeles, said that Yeghiayan was the originating lawyer who first referred the Armenian genocide cases to him and Geragos in about 2000. In the case against New York Life, which settled in 2004 for $20 million, the class opted to designate $3 million of the proceeds for charities devoted to assisting orphans, the elderly, disabled, widows and the impoverished in the Armenian community, according to the suit. Yeghiayan allegedly designated a charity, known as the Center for Armenian Remembrance, which was approved for $200,000 of those funds. Instead, Yeghiayan used the organization to pay personal and law firm expenses and to launder money from creditors including the Internal Revenue Service, the California Franchise Tax Board and several others, the complaint alleged. Kabateck said in an interview that the link between Yeghiayan and the Center for Armenian Remembrance came to light after he and Geragos began doing due diligence in October in the Axa case, which was winding down. “We didn’t know any information on the charity,” Kabateck said. “It sounded like a legitimate charity. There are tons and tons of legitimate charities out there. When we started looking into it, one of the first things we found was the Center for Armenian Remembrance operated out of his law firm. Our initial thought was maybe he’s loaned them space. Then we got the checks that he wrote to this charity and one of them is endorsed by his associate.” In the Axa case, which settled in 2005 for $17 million, Yeghiayan provided the name of a charity organization called Conservatoire de la Memoire Armenienne in Paris, which was approved for $300,000 in cy pres funds. In their suit, Geragos and Kabateck claim the organization, for which Mahdessian endorsed the check, turns out to have a nonexistent office. Both charities received additional cy pres funds in March 2010, raising the total in the Axa case to $465,000, the complaint alleged. A third charity group Yeghiayan listed in that case that was approved for $75,000 in cy pres funds turned out to be the Italian name of the Vatican Bank. Geragos and Kabateck alleged that two other charity organizations are nonexistent or sham entities. Yeghiayan said that not all the money in the fund has been distributed, even though Kabateck and Geragos have requested that it be closed down. “I’m the one who filed the [Axa] lawsuit. They eliminated my name and put the trust account in both their names and have not given an accounting to anyone for the last four years,” Yeghiayan said. “They know I was going to attack then, so they are filing suit against me. Fine.” Via e-mail, Kabateck said that U.S. District Judge Christina Snyder in Los Angeles, who is hearing the Axa case, denied a previous request for an audit that Yeghiayan made last year. All distributions have been approved by the court, he said. Yeghiayan and Mahdessian have a history of disciplinary issues with the State Bar of California. In 1996, Yeghiayan was placed on one year’s probation because he failed to reimburse a client’s insurance firm for five years following settlement of a case. He also misappropriated funds from his client trust account in the same case, the state bar said. In 1994, Mahdessian pleaded guilty to one count of possessing fraudulent identification documents – specifically, fraudulent immigration amnesty applications. She was sentenced to three years’ probation and fined $10,000. In 1996, the bar suspended her license for two years following her guilty plea. In 2005, she was suspended for three months after being found to have aided in the unauthorized practice of law, failed to perform legal services competently, failed to keep her client informed about her case, and misrepresented her involvement in a case. She also was found to have neglected to contact her client for several months in an immigration matter. Kabateck said he and Geragos knew about their disciplinary histories when they began working with the couple, but didn’t consider them red flags. “And frankly, the case and the cause and what we were pursuing was and remains bigger than the lawyers involved in the case,” he said. “So we overlooked the fact that he’s had some problems in his past. Mark and I are big believers that people deserve a second chance and a second shot.” The suit alleged intentional fraud, fraudulent concealment, breach of fiduciary duty, breach of contract, unfair business practices and other claims under California law. Amanda Bronstad can be contacted at [email protected].

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.