May 3, 2022

US seeks forfeiture of estate tied to foreign bribery proceeds

On May 2, 2022, the US Department of Justice filed a complaint seeking the forfeiture of a multimillion dollar mansion near Los Angeles, California, which the DOJ alleges was purchased through funds derived from laundering the proceeds of the bribery of a foreign official.  The property is indirectly owned by Gagik Khachatryan — who served as Chairman of the State Revenue Committee of the Republic of Armenia from 2008 through 2014, and then as Minister of Finance until 2016 — and his two sons.

As alleged in the complaint, between 2008 and 2016, Armenian businessman Sedrak Arustamyan made millions of dollars in corrupt payments to Khachatryan and his sons in exchange for receiving favorable tax treatment for more than 20 business owned or controlled by Arustamyan.  A portion of these corrupt payments were made through sham loans Arustamyan provided to Khachatryan’s sons, including one for $7 million in July 2009 and one for over $13 million in July 2011 (neither of which was ever repaid).  As a result of these years of tax nonpayment, Arustamyan’s companies currently owe millions of dollars in unpaid taxes and penalties.

The complaint also alleges that, in July 2011, a trust controlled by Khachatryan’s sons entered into a $14.4 million purchase agreement for the subject property by providing a false letter of proof as to the existence of funds sufficient to cover the purchase price in a bank account in Armenia, when in fact the property was paid for by Arustamyan.  Following the purchase of the property, members of the Khachatryan family commissioned the construction of a 10-bedroom mansion.

Khachatryan and his sons have been charged in Armenia with receiving bribes, and Arustamyan has been charged in Armenia with paying bribes, in both cases in violation of the Armenian Criminal Code.

DOJ press release | Complaint in rem