Arms Dealer Arrested on Bank Fraud Charges

An international arms dealer nicknamed “The Merchant of Death” has been arrested here on charges that he conspired to defraud a Los Angeles bank of more than $3 million.

Sarkis Soghanalian, 70, was taken into custody last week and is being held without bond pending extradition to Los Angeles to face a 10-count federal indictment charging him with bank fraud and money laundering.

According to the indictment handed up by a federal grand jury in Los Angeles in October but unsealed only this week, Soghanalian and four co-conspirators in 1995 stole two blank checks from the Great Western Bank in Los Angeles. One of those checks, later made out for $3 million, was sent to Soghanalian in Paris, where he deposited it in a bank, according to the indictment.

The second check, made out for $300,000, was cashed at the Mirage Hotel and Casino in Las Vegas, prosecutors said.

Soghanalian was arrested Dec. 22 after arriving here on a flight from Paris.

Also charged were Gilbert Petrosian, a bank employee, and three others identified only as Zhanno Torosyan, Araik Asatryan and Andranik Asatryan.

Over the years the corpulent and colorful Soghanalian has made a fortune dealing arms to various nations, often while involved with the U.S. government in what one of his former defense attorneys, Neal R. Sonnett, called a “complicated relationship.”

As an arms dealer, Soghanalian has brokered billions of dollars worth of weapons and munitions--to the Christian militia in Lebanon, to Argentina during the Falklands War and to the Nicaraguan Contras. Many of those deals were aided or tacitly approved by officials of the Nixon and Reagan administrations, according to records disclosed in various investigations.

He was prosecuted here in 1991 for conspiring with two former officials of Hughes Helicopter Corp. to smuggle 103 combat helicopters and two rocket launchers to Iraq during that nation’s war with Iran in 1983. Soghanalian had a close working relation with Iraq’s leader Saddam Hussein and has brokered about $1.6 billion in weapons to that nation.

At trial, Sonnett argued that his Lebanese-born client had been encouraged by Reagan administration officials to arm Iraq during its war with Iran. But in a verdict delivered weeks after the end of the Gulf War, when anti-Iraqi sentiments in the U.S. ran high, a 12-member jury didn’t buy it.

“He does not have the appearance of a Jack Armstrong all-American boy,” Sonnett said of his former client, who weighs 300 pounds. In arguing for a long prison sentence after his 1991 conviction, Assistant U.S. Atty. Susan Tarbe told the court: “He’s a con man. He’s a master manipulator who has perverted the American dream. He proudly wears the label ‘Merchant of Death.’ ”

Sentenced to 6 1/2 years in prison, Soghanalian served just two years when prosecutors recommended he be released. Another of his former attorneys, Gerald Richman of West Palm Beach, Fla., said later that Soghanalian had his sentence cut after providing intelligence that helped U.S. authorities break up a Middle East counterfeiting ring that was dumping millions in fake $100 bills into Lebanon’s Bekaa Valley.

Soghanalian was born to Armenian parents in Turkey and grew up in poverty in Beirut, where he later began an arms dealing career that made him a fortune. For several years he lived on Hibiscus Island in Miami Beach in a palatial home while he and his son, Garabet, operated an air cargo business at Miami International Airport.

He also has owned homes in Athens, Madrid and Paris, as well as a 136-acre farm in Wisconsin.

In interviews, Soghanalian has described himself as a devout anti-communist who has been abetted in his dealings by the Central Intelligence Agency. Richman, his former lawyer, has also confirmed that Soghanalian has been involved in U.S. intelligence activities.

Of the current charges, Miami attorney Oscar R. Arroyave said, “I don’t believe there’s any connection with his past.” A second hearing on Soghanalian’s motion to be freed on bond is set for Wednesday.