The US government is about to seize a massive mansion in Los Angeles that it says was bought with millions in bribe money that was paid to the ex-finance minister of Armenia and his children.
A federal complaint was filed this week in court that seeks the forfeiture of the 33,000-square-foot mansion in the tony community Holmby Hills.
The Department of Justice complaint states the home was bought for $14 million in 2011 by a trust for Gagik Khachatryan and his sons. All of the men face corruption charges in Armenia.
It isn’t known if the three Armenians have lawyers in the US who will speak on their behalf regarding the forfeiture request. It will most likely take several months for the forfeiture to go through.
Former Playboy Mansion Nearby
The extravagant mansion is a few streets from the former Playboy Mansion. In the 1990s, the home was renovated into a French-Normandy style featuring 11 bedrooms and 26 bathrooms.
Included are a pool, home theater, wine cellar, and maids’ quarters. It also sits on more than three acres and the landscape is exquisitely landscaped. The home was put on the market in April at a $63 million price.
Khachatryan was once known in Armenia as the ‘Super Minister’ because of his many political roles and responsibilities. He also was Chair of the State Revenue Committee in his country from 2008 to 2014 and was Finance Minister from 2014 to 2016.
The federal government argues that rich businessman Sedrak Arustamyan, who also was charged in Armenia, paid Khachatryan and his family at least $20 million in bribes to get favorable tax treatment for his companies. It’s also alleged that some of that money was used to buy the vast LA estate.
Forfeiture of the LA mansion is being executed under the Kleptocracy Asset Recovery Initiative. This federal program’s goal is to seize assets that stem from official corruption. When appropriate, the recovered assets are liquidated to benefit people who were harmed by the criminal activity.
LA Mansion Saga Started In 2008
It was in 2008 when Khachatryan assumed leadership of the State Revenue Committee, the organization that collects and assesses taxes in Armenia.
The federal government alleges that Arustamyan entered into two fake loan agreements with the minister’s sons. The initial loan was $7 million and the other $11 million. Both loans had language that detailed when payments were due, as well as the interest rate.
However, court filings reveal that Arustamyan didn’t receive interest or principal payments on the ‘loans.’ This unusual fact made it look like the loans were not loans at all but illegal payments or bribes.
To use those ‘loans,’ Khachatryan and his adult sons created several business entities to hide bribe payments, as well as their purchase of the LA property. At least $13 million was sent by Arustamyan to Comerica Bank on the West Coast. But just before the mansion sale closed, he said he would not keep title and gave up all claims on the money.
After he bought the home, which was once owned by entertainment executive Jon Feltheimer, the family tore it down. They hired renowned mega-mansion designer Richard Landry, who has built custom estates for the well-heeled, including Tom Brady and Mark Wahlberg.
When Khachatryan left office in 2016, the bribery scheme was found. Federal authorities found millions in unpaid taxes by Arsutamyan’s businesses, federal prosecutors state.
Khachatryan was charged with embezzlement and abuse of power in 2019. His two sons were hit with federal charges in 2020. But the sons, Artyon and Gurgen, fled the US for Armenia last year.
Khachatryan First Faced Charges in Armenia in 2019
The former finance minister first faced trouble in his home country in 2019. That was when he was arrested for alleged abuse of official power and misuse of public funds.
At the time of his initial detention in Armenia, Khachatryan’s attorneys alleged the following:
- There is a lack of evidence that Khaachatryan committed the crimes in Armenia he was accused of, they claimed. The court didn’t look at any evidence that would give it a reasonable suspicion that the crime happened and that the ex-minister had anything to do with it.
- The court didn’t explain why it detained Khachatryan. They didn’t prove why the ex-official was deemed a flight risk or would be at risk of committing additional crimes. Detention pending trial, according to the EU Court of Human Rights, is the most severe type of prevention and should only be used as a last resort.
- All Armenian criminal charges were assigned to the same judge. Khachatryan’s attorneys suspected there was something fishy going in when the motion to detain him was given to the same judge who gave the green light to search his apartments without cause. The same judge was to hear the hearing about the legality of Khachatryan’s arrest.
- Khachatryan responded immediately when a criminal investigator called him and flew back from Germany. This shows, the attorneys argue, that he didn’t try to hide from the inquiry. In fact, he reported to the police investigating the matter as soon as he arrived in Armenia.
- Khachatryan would not let his attorneys use the fact that he was seriously ill as an argument in his favor. His illnesses allegedly cannot be well treated in Armenia, but he cannot get his necessary treatments while being detained in his home country.