Two lawyers, intimately involved in suing insurance companies to settle policies held by Armenian Genocide survivors over a decade ago, have denied allegations brought by the California State Bar’s Disciplinary Department that they misappropriated hundreds of thousands of dollars received in court settlements in the suits for personal benefit and that they misrepresented facts to a U.S. District Court.

In August 2016, the California State Bar filed allegations that the two lawyers, Vartkes Yeghiayan and his wife Rita Mahdessian, siphoned over $355,000 in money received from the settlement of pre-Genocide insurance claims held by New York Life Insurance Company and the French multinational insurance company AXA for personal gain.

The disciplinary charges filed against the two can be accessed here: Yeghiayan, Mahdessian.

(They are both Public Record. The Bar issues the following DISCLAIMER: Any posted Notice of Disciplinary Charges, Conviction Transmittal or other initiating document, contains only allegations of professional misconduct. The attorney is presumed to be innocent of any misconduct warranting discipline until the charges have been proven.)

The two lawyers have recently denied all allegations filed by the California Bar and are currently practicing law in California at Yeghiayan and Associates, Glendale, California (See denials: Yeghiayan, Mahdessian)

Both cases are pending at the California State Bar’s Hearing Department.

Yeghiayan, who served as the counsel of record and co-lead counsel in a number of class actions, (including Marootian, et al. v New York Life Insurance Company; Kyurkjian, et al. v AXA, S.A., et al.; and Ouzounian, et al. v. AXA, S.A. et al.) and his wife, who also served as co-counsel in a number of the class actions, were each hit with four counts of disciplinary charges – Misappropriation of Funds; Misleading a Judge; Moral Turpitude; and Assisting, Soliciting, or Inducing Violations of the Rules of Professional Conduct or the State Bar Act.

In 2004, a class action suit filed against New York Life Insurance Company netted a $20 million settlement. In 2005, AXA was required to pay a $17.5 settlement.

The California State Bar alleges that Yeghiayan and Mahdessian conspired to set-up “front” charitable organizations (CAR-Center for Armenian Remembrance, and CMA-Conservatoire de la Memoire Armenienne) in order to funnel award money from the settlements through these charitable organizations and ultimately to themselves and their law firm.

The Bar alleges that Yeghiayan “mislead” a U.S. District Court when he filed a request for $200,000 of the New York Life Insurance Company settlement to go to CAR. The lawyer never told the judge that he and his wife had created CAR a mere three months after the settlement had been approved. Yeghiayan claimed that CAR qualified to get the money as a charitable organization working for the good of the Armenian community.

As part of the $20 million settlement, a $3million Unclaimed Benefits Fund was set-up and nine specific beneficiaries were listed (including the Western Prelacy and Western Diocese of the Armenian Apostolic Church).

The settlement stipulated that any amounts remaining in the Claim Fund or Administrative Fund would revert to the Unclaimed Benefits Fund and then be distributed to “charitable organizations recommended by class counsel – namely Vartkes Yeghiayan.

The picture is the same regarding the $17.5 million AXA settlement. It set-up a Cost Fund of $3.150 million to cover legal and attorney fees. Any leftover would revert to the $3million Community Fund, ostensibly to support charitable organizations assisting the needy and education in France.

The court designated Vartkes Yeghiayan, as one of the lead counsels, to administer the settlement funds.

Yeghiayan later created the CMA and opened bank accounts for the organization at Wells Fargo National Bank in California. (CAR also had bank accounts at Wells Fargo).

The lawyer then told a district court that CMA was entitled to $300,000 from the Community Fund as a qualified charitable organization. The court permitted the transfer.

Here too, the California State Bar alleges that Yeghiayan willfully withheld facts from the district court. For example: that he, alone or with his wife, filed incorporation paper for CMA; that Rita Mahdessian opened CMA bank accounts at Wells Fargo listing herself as one of the two primary owners; that Rita Mahdessian had control of CMA’s checking account; and that CMA was inextricably linked to CAR.

Where Did the Money Go? The BAR Charges are Quite Specific!

The California State Bar alleges that $199,000 of the money that eventually wound up in the CAR bank account went to Yeghiayan personally or to the couple’s law firm.

$11,000 was paid to Loyola Law School towards the first-year law tuition of the couple’s two children – Armen and Tamar Yeghiayan. Another $10,000 went to Tamar.

“Thus, $220,000 was paid from CAR to Vartkes Yeghiayan, their law firm, or for his family’s benefit between April 2010 and September 26, 2010, in addition to another $31,000 transferred directly to their law firms bank account from Yeghiayan’s AXA Trust Account, for a total in excess of $250,000.”  (See above Yeghiayan document, Count One, Point 35)

“Respondent also deliberately and willfully withheld from, and thus misrepresented to the district court, that between January 1, 2009 and April 2010, Respondent’s wife, Rita Mahdessian, had caused CAR to pay an additional $26,500 to Respondent, to herself or to their law firm and another $30,000 to their daughter, Tamar Yeghiayan--for a total of another $56,500 before the transfers from the AXA Trust Fund began” (See same, Count One, Point 36)

Finally, Yeghiayan is said to have made charitable donations from the AXA Community Fund to Loyloa Law School ($100,000) and to the Instituo Per Le Opere Di Religione – Vatican Bank ($75,000)

The California State Bar claims that: Respondent [Yeghiayan] deliberately and willfully withheld from, and thus misrepresented to the district court, that the four organizations--CAR; Loyola Law School; Vatican Bank; or CAM---did not qualify, in accord with the AXA settlement agreement, as proper beneficiaries for charitable distributions from the AXA Community Fund. (See same, Count One, Point 37)

Even Օne-Time Partners Involved in Genocide Survivor Insurance Cases Accused Each Other of Fraud

Readers will remember that in March 2011, attorneys Mark Geragos and Brian Kabateck filed a law suit in Los Angeles County Superior Court, charging their former partners in the Genocide survivor insurance settlement case, Vartkes Yeghiayan and Rita Mahdessian,  of defrauding the Armenian community by skimming $1million in settlement funds to fictitious charities (CAR and CAM).

At the time, Yeghiayan denied the allegations made in the lawsuit, adding that Geragos and Kabateck were “pissed off” because they were left “out of” other Genocide settlement cases.

Discussing the case with the Daily Journal (a California-based legal newspaper), Yeghiayan accused Geragos and Kabateck of “hoarding more than $17 million,” reported the Daily Journal.

The suit was finally settled in July 2013, when the sides involved agreed to have a third-party arbitrator review all the costs and charitable awards the attorneys claimed from the original settlement with French insurer AXA. S.A.