The U.S. Justice Department is seizing a $63 million, more than 30,000-square-foot Los Angeles mansion from the family of former Armenian government official Gagik Khachatryan. This mansion, which federal prosecutors allege was paid for with millions of dollars in bribes, is part of a settlement reached in a civil forfeiture case to recover property bought with bribes in Khachatryan’s corruption scandal, according to a news release from the U.S. Justice Department.
The home belonging to the family of Gagik Khachatryan is situated in LA’s Holmby Hills neighborhood, wedged between Beverly Hills and Bel Air. The estate was purchased by a trust benefiting Khachatryan’s sons in 2011 with funds provided by Armenian businessman Sedrak Arustamyan, prosecutors said. When the home was bought in 2011, Khachatryan was Armenia’s most senior government official overseeing taxes and customs. He was chairman of Armenia’s State Revenue Committee from 2008 to 2014 and went on to become Finance Minister from 2014 to 2016. He was popularly known as the “super minister” due to his numerous responsibilities. The 68-year-old is currently the defendant in a corruption-related criminal case in Armenia.
In May 2022, when prosecutors first announced plans to seize the estate, they alleged Armenian businessman Sedrak Arustamyan paid Khachatryan and his family more than $20 million in bribes for the home’s purchase”money they say he paid in exchange for favorable tax treatment of his businesses. In 2019, the Investigative Committee of the Republic of Armenia announced charges against Arustamyan in connection with allegations of money laundering and tax evasion.
Khachatryan’s sons claimed the funds were provided as loans by the businessman, but the U.S. Justice Department alleges the money used to buy the house actually came from covers for bribe payments. U.S. prosecutors say those so-called loans were never repaid as they were repeatedly extended and are currently the subject of ongoing criminal investigations in the Republic of Armenia.
The Los Angeles Times described the estate in May 2022 as an 11-bedroom, 27-bathroom French chateau-style estate that’s just down the street from the Playboy Mansion. The Times reported the home was previously owned by Jon Feltheimer, CEO of Lions Gate Entertainment, and the family hired architect Richard Landry, who has worked with celebrities such as Mark Wahlberg and Tom Brady. The mansion was estimated by U.S. prosecutors to be worth $63.5 million in May 2022. An updated estimated value of the home was not given Monday.
U.S. District Judge Josephine L. Staton approved a consent judgment for the estate’s forfeiture on June 30 after the government filed a civil suit in May 2022 claiming it had been bought as a result of corrupt activity by Gagik Khachatryan. Two of Khachatryan’s adult sons are named as counterclaimants in the case. An attorney representing the sons did not immediately respond to requests for comment.
On Monday, the U.S. Justice Department announced that it has reached a settlement allowing the civil forfeiture of the mansion belonging to the family of Gagik Khachatryan. “Under the terms of the settlement, the mansion will be forfeited to the United States. The United States will then sell the property at the highest obtainable market price and keep 85% of the net proceeds of the sale. The remaining net proceeds of the sale will be delivered to Khachatryan’s sons and a corporation they own. The Attorney General has the discretionary authority to transfer forfeited property to any foreign country that participated directly or indirectly in the seizure or forfeiture of the property. The offices that brought the case intend to recommend the transfer of some or all the forfeited proceeds to the Republic of Armenia,” said the DOJ news release.
The U.S. Government is represented by Hunter Smith of the DOJ’s Money Laundering and Asset Recovery Section and Maxwell Coll of the U.S. Attorney’s Office for the Central District of California. Artyom and Gurgen Khachatryan are represented by Christopher James, Ephraim Wernick, and Peter Thomas of Vinson & Elkins LLP. The case is U.S. v. Real Property in Los Angeles, California, case number 2:22-cv-02902 in the U.S. District Court for the Central District of California.
“We do not tolerate corruption in the United States and we will not allow foreign officials to use our country to facilitate their own corruption. Our recovery of these ill-gotten gains should send a message to corrupt officials throughout the world that they will find no safe harbor here,” said United States Attorney Martin Estrada.
The FBI’s Eurasian Organized Crime Task Force (EOCTF) and U.S. Marshals Service investigated the case. The EOCTF is composed of multiple law enforcement agencies including the FBI, IRS-Criminal Investigation, the U.S. Postal Inspection Service, the Glendale Police Department, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department. The Justice Department’s Office of International Affairs, Republic of Armenia’s Prosecutor General’s Office, and Armenian investigative authorities also provided critical assistance.
Assistant United States Attorney Maxwell Coll of the Cyber and Intellectual Property Crimes Section and Trial Attorney Hunter Smith of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) prosecuted this case.
The Kleptocracy Asset Recovery Initiative is led by a team of dedicated prosecutors in MLARS, in partnership with federal law enforcement agencies and often with U.S. Attorney’s Offices, to forfeit the proceeds of foreign official corruption.
