U.S. Justice Department Reaches Settlement to Recover Los Angeles Mansion Purchased by Family of Former Armenian Government Minister

The United States Justice Department reached a settlement in a civil forfeiture case involving a mansion in the Holmby Hills section of Los Angeles, owned by the family of Gagik Khachatryan, a former government official in the Republic of Armenia.

In 2011, a trust benefiting Khachatryan’s sons purchased the property with funds provided by an Armenian businessman. At the time, Khachatryan was the most senior official in charge of taxes and customs in the Republic of Armenia. The sons claimed that the funds were provided as loans by the businessman, while the United States alleged the loans, which were repeatedly extended without repayment, were covers for bribe payments. These payments are also the subject of pending criminal prosecutions in the Republic of Armenia.

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 retain 85% of the net proceeds. The remaining net proceeds 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 of the forfeited proceeds to the Republic of Armenia.

Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; U.S. Attorney Martin Estrada for the Central District of California; Acting Assistant Director in Charge Krysti Hawkins of the FBI Los Angeles Field Office; and U.S. Marshal David M. Singer made the announcement.

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, U.S. Postal Inspection Service, Glendale Police Department, Los Angeles Police Department, and Los Angeles County Sheriff’s Department. The Justice Department’s Office of International Affairs, the Republic of Armenia’s Prosecutor General’s Office, and Armenian investigative authorities also provided critical assistance.

Trial Attorney Hunter Smith of the Criminal Division’s Money Laundering and Asset Recovery Section (MLARS) and Assistant U.S. Attorney Maxwell Coll for the Central District of California prosecuted the case.

Background: May 2022

In May 2022, the U.S. federal government sought the forfeiture of a more than 33,000-square-foot mansion in Los Angeles, believed to have been purchased with bribes paid to former Armenian official Gagik Khachatryan. The mansion, located in the upscale Holmby Hills neighborhood and recently listed for sale at $63.5 million, was purchased in 2011 by a trust on behalf of Khachatryan and his family for $14.4 million with bribes paid by Armenian businessman Sedrak Arustamyan, the U.S. government alleges.

In total, Arustamyan paid the Khachatryan family more than $20 million in exchange for favorable tax treatment of his business, according to the Justice Department. Khachatryan headed Armenia’s State Revenue Committee from 2008 to 2014, after which he spent two years as the country’s finance minister. The 11-bedroom, 26-bathroom mansion in Los Angeles was allegedly purchased during Khachatryan’s time leading the State Revenue Committee.

Khachatryan, several of his relatives, and Arustamyan have all faced criminal charges in Armenia for receiving or paying bribes. In 2020, the elder Khachatryan was released for health reasons after being arrested on charges of large-scale embezzlement and abuse of power. He is believed to be in Armenia.

According to the Justice Department press release, the investigation was conducted by the Federal Bureau of Investigation and the U.S. Marshals Service, with critical assistance from Armenia’s Prosecutor General’s Office and National Security Service.

The forfeiture is being sought under the Justice Department’s Kleptocracy Asset Recovery Initiative, which works to recover the proceeds of foreign official corruption by seizing assets in the United States or connected with the U.S. financial system.