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Husband-and-wife legal team accused of embezzling settlement money from Armenian Genocide survivor benefits lawsuit

Husband-and-wife legal team accused of embezzling settlement money from Armenian Genocide survivor benefits lawsuit
Vera Tchaghayan-Acun of Sun Valley holds a sign during the March for Justice commemorating the 100th anniversary of the Armenian Genocide, in this file photo taken Friday, April 24, 2015. The State Bar of California alleges a husband-and-wife legal team based in Glendale siphoned more than $300,000 of settlement money from a lawsuit over Armenian Genocide survivor benefits. (Raul Roa / Glendale News-Press)

Two Glendale attorneys could face disciplinary action after the State Bar of California alleged the pair embezzled hundreds of thousands of dollars from a multimillion-dollar settlement relating to the Armenian Genocide.

The state bar filed several disciplinary charges last year against Vartkes Yeghiayan and Rita Mahdessian, who are husband and wife, ranging from misappropriation of funds to moral turpitude. They alleged the couple had siphoned more than $300,000 of settlement money stemming from a class-action lawsuit over survivor benefits from the Armenian Genocide.

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The two have since denied the charges. Kevin Gerry, an attorney representing the two, said he expects to vigorously defend the couple in court.

"We dispute the allegations set forth in the state bar disciplinary charges and we deny being involved in or being aware of any improprieties whatsoever regarding the handling of any of the matters in the state bar claims," he said.

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According to bar documents, the couple allegedly misrepresented two nonprofit groups they created to appropriate the funds.

In 2005, a class-action lawsuit was brought against French insurance company AXA S.A. over survivor benefits from descendants of Armenian Genocide victims. Yeghiayan and Mahdessian were co-counsels on the case.

The resulting settlement from the case was $20 million, with the insurance company being required to pay $17.5 million. From that settlement, a $3 million Unclaimed Benefits Fund was set up, naming nine specific beneficiaries, according to documents from the state bar.

As part of the fund, any money left over used to pay the main settlement and administrative costs could then be distributed to charitable organizations recommended by the suit's lawyers — namely Yeghiayan and Mahdessian.

The state bar said one of the nonprofits, the Center for Armenian Remembrance, was created only three months after the settlement was approved and based out of the couple's Brand Boulevard law firm.

The second nonprofit, the Conservatoire de la Memoire Armenienne, was also said to be based out of their office.

According to the state bar, the two then requested more than $300,000 be given to the organizations because they qualified as charitable. However, the two failed to produce any record of charitable activity or disclose their ties to the nonprofit, according to court documents.

The two allegedly used some of the funds on their own law firm and to pay college tuition for their two children.

This isn't the first time Yeghiayan and Mahdessian have been accused of embezzling funds.

In 2011, the lead attorneys from the class-action suit, Mark Geragos and Brian Kabateck, accused the two of setting up fake charities to siphon more than $1 million.

The two also denied those allegations.

Both Yeghiayan and Mahdessian are still active to practice law, according to the state bar's website.

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Andy Nguyen, andy.nguyen@latimes.com

Twitter: @Andy_Truc

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