The Mercedes-Benz 1957 300SL Coupe Gullwing is the type of car at issue in the Soghanalian case. (Byron Purvis/AdMedia)
A judge has ordered a defendant to spend 30 days in jail for civil contempt for weaving a “tapestry of deceit” to conceal his violation of a court order not to move a prized Mercedes Benz that is central to a fraud case.
Broome County Supreme Court Justice Ferris Lebous (See Profile) ordered Zaven Soghanalian to serve his time in the Broome County Jail in Binghamton starting 30 days from when he received the judge’s April 1 ruling, unless Soghanalian provides proof that the 1957 Mercedes 300SL Gullwing has been returned to the jurisdiction of Lebous’ court in the meantime.
“Zaven Soghanalian has engaged in a massive shell game, spiced with international intrigue, attempting to divert the court’s attention from the reality of this situation, namely, his willful removal of the Mercedes in direct contravention of the order of this court,” Lebous wrote in Soghanalian v. Young, 2012-1120.
The judge said Soghanalian’s conduct in disobeying the judge’s “unequivocal mandate” not to allow the car to be moved came “dangerously close” to criminal contempt.
Soghanalian’s wife, JoAnn, was a “willful party to the cover-up, concealment and removal” of the Mercedes, Lebous ruled, but she did not “mastermind” the contempt. The judge spared her jail time, but said both Soghanalians will be subject to their adversary’s reasonable attorney fees related to their contemptuous conduct between July 2012 and April 1, 2014.
The car is potentially a key element in the fraud case, in which JoAnn Soghanalian is alleging that attorney John Young, and her husband Zaven, defrauded her through a corporation named Stuart Realty Enterprises that was formed upon his advice in 1985 for the Soghanalian’s benefit.
The judge said his inquiry into the whereabouts of the silver sports car revealed a complex narrative that included Zaven Soghanalian, the brother of the late Middle East arms dealer Sarkis Soghanalian; Mohammed Abdullah Al-Shahwani, a former Iraqi army general; and the purported swap of the Mercedes by Zaven Soghanalian to Al-Shahwani in exchange for a Picasso painting.
“The court will not attempt to provide a complete summary of the testimony of either plaintiff JoAnn Soghanalian or defendant Zaven Soghanalian as it is nearly impossible to create a coherent time line out of the testimony presented,” Lebous explained.
The Mercedes 300SL was called a “Gullwing” because of the way the upward-opening passenger- and driver-side doors resemble the wings of a seagull in flight as they meet on the sports car’s roof when opened.
The Soghanalian Gullwing was valued by the parties at between $500,000 and $800,000. Gullwings often fetch in excess of $1 million from collectors during auctions of vintage automobiles.
About 1,400 Gullwings, which originally retailed for about $11,000, were manufactured between 1954 and 1957. The model was rated No. 5 in a Sports Car International magazine ranking of all-time best sports cars.
It is alleged in Soghanalian v. Young that Zaven Soghanalian transferred ownership of the Mercedes in 1998 to Stuart Realty Enterprises. If true, the vehicle would represent the biggest asset held by the corporation.
Lebous noted that in connection with the fraud case, he signed an order on June 22, 2012, prohibiting Zaven Soghanalian and his wife JoAnn Soghanalian from “selling, removing, transferring, encumbering, pledging, damaging, hiding, concealing, assigning or otherwise disposing” of the sports car, which was believed to be in a garage at the Soghanalians’ residence in Vestal, outside Binghamton.
But Lebous said that when his order was returned on June 29, 2012, JoAnn Soghanalian told the judge at a hearing that the Gullwing was no longer in the garage where it had customarily been parked.
In the subsequent contempt proceeding, in which hearings were held between August 2012 and June 2013, Lebous said Zaven Soghanalian said that the former general, Al-Shahwani, arranged to have the Mercedes removed from the Soghanalian garage in Vestal on June 16, 2012, before Lebous issued his order not to move the coupe.
Soghanalian said he transferred ownership of the vehicle to Al-Shahwani in exchange for a Picasso.
Soghanalian said his Vestal neighbors who said they saw a sports car covered with a tarp being removed on a flat-bed truck from the Soghanalian property on June 28, 2012, were mistaken that it was the Gullwing. He said it was actually another sports car.
Lebous said that with much difficulty, he was able to determine that the car was taken from Al-Shahwani’s home in Virginia on or about June 23, 2012, and brought to Houston, Texas, under the control of John Kupelian. The car is apparently still in Texas, the judge concluded.
Lebous said that unraveling the truth about when the Gullwing was moved and where it is now was hampered by Al-Shahwani’s refusal to leave his home in Virginia and testify in the Binghamton court or to be deposed about the matter in Virginia.
Kupelian, Zaven Soghanalian’s cousin, did submit to a video deposition in August 2013, but Lebous said it hardly cleared up the matter. The judge noted that Kupelian said the car “belongs” to Al-Shahwani, but that the title remains in Zaven Soghanalian’s name. Asked precisely where the car was, Kupelian refused to reveal a location.
“It’s a valuable car, and I don’t want anybody to know where the car is,” the court quoted Kupelian as saying in the deposition. “It is for sale. Give me the money, we’ll show it to you.”
“In sum, Mr. Kupelian’s testimony was anything but straightforward with the clear purpose of attempting to confuse the facts making it more difficult for the court and the parties to trace and locate the Mercedes,” an exasperated Lebous wrote. “The court congratulates Mr. Kupelian on a job well-done.”
Zaven Soghanalian was represented by Matthew Butler of Butler & Butler in Vestal.
Philip Artz of McDonough & Artz in Binghamton represented Young and Stuart Realty Enterprises.
Raymond Schlather of Schlather, Stumbar, Parks & Salk in Ithaca argued for JoAnn Soghanalian.
As to the underlying fraud case, Lebous dismissed five of JoAnn Soghanalian’s six claims, including fraud, breach of fiduciary duty and diversion and waste of corporate assets, as untimely in a December 2013 ruling.
The judge said her suit, brought in May 2012, should have been filed at the latest by June 2008 to meet the six-year statute of limitations for the five claims. Lebous said JoAnn Soghanalian clearly had knowledge of Young’s alleged misdealings in Stuart Realty Enterprises in June 2002, when she wrote a letter to the state attorney general’s office complaining about Young, and that the statute of limitations began tolling that month.
Lebous said the sixth cause of action, for the involuntary judicial dissolution of Stuart Realty, stood because the defendants had not asserted the statute of limitations argument against the court on that count.
Zaven Soghanalian has lived in the Binghamton area since at least 1960.
His brother Sarkis, who died in 2011, was a private arms dealer who was applauded by U.S. officials when he sold weapons to Iraq during the Iraq-Iran conflict. But he was later convicted by American authorities of making illegal arms sales to Iraq.
@|Joel Stashenko can be contacted at email@example.com.