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A Tale Of Two Press Releases

tale

An interesting tale of two press releases.

One from the Department of Justice.

Another from a law firm representing a client in a DOJ matter.

This recent DOJ press release titled “Justice Department Reaches Settlement to Recover Los Angeles Mansion Purchased by Family of Former Armenian Government Minister” states in pertinent part:

“The Justice Department reached a settlement for a civil forfeiture case against a mansion in the Holmby Hills section of Los Angeles belonging to 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. The 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 of the sale. The remaining net proceeds of the sale will be delivered to the 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 transfer of some or all of the forfeited proceeds to the Republic of Armenia.”

This Vinson & Elkins Press Release titled “Vinson & Elkins Secures Favorable Resolution with U.S. Department of Justice On Behalf of Prominent Armenian Businessmen” states in pertinent part:

“In June 2024, Vinson & Elkins, LLP secured the successful closure of a high-profile DOJ investigation, which included a favorable resolution of all claims by the U.S. Department of Justice (“DOJ”) on behalf of Vinson & Elkins clients Artyom Khachatryan, Gurgen Khachatryan and their U.S. company, WRH, Inc. (collectively, the “Khachatryans”). The Khachatryans are well-known and respected businessmen and owners of the Galaxy Group of companies in Yerevan, Armenia. The resolution of the DOJ case and closure by DOJ of a related investigation represents a significant victory for the Khachatryans, and settles their long-running dispute with DOJ concerning their lawful purchase and construction of a property in the esteemed Holmby Hills neighborhood in Beverly Hills, California (the “Holmby Hills estate”).

As explained in public court filings, the Khachatryans’ first purchased the Holmby Hills estate and began construction on the property in 2011. After the change of government in Armenia in 2018, the Khachatryans were unfairly targeted by the new government and their legitimate rights to their Holmby Hills estate came into question. In January 2022, the Khachatryans listed the Holmby Hills estate for sale, after Vinson & Elkins transparently notified the government of the Khachatryans’ intention to sell the property. Unfortunately, in April 2022, after receiving an apparently politically motivated referral from the Armenian government, DOJ filed a forfeiture complaint against the Holmby Hills estate, in the United States District Court for the Central District of California. Vinson & Elkins immediately filed a claim to the property on behalf of the Khachatryans, and Vinson & Elkins moved to dismiss the government’s complaint. The court then stayed the forfeiture case upon the request of the government so that DOJ could complete its investigation.

Over the past two years, Vinson & Elkins cooperated fully with DOJ’s investigation, proactively providing the government with access to voluminous materials, bank records and witness interviews and sworn statements. After over two years of investigation and repeated engagement with Vinson & Elkins, on June 11, 2024, DOJ formally issued Vinson & Elkins a rare declination letter to explain that DOJ was closing its investigation into the Khachatryans’ purchase of the Holmby Hills estate. Under the terms of the declination letter, DOJ closed its investigation and specifically noted that there were “no other ongoing criminal investigations into [the Khachatryans] at this time.” With the DOJ investigation closed and the stay of the forfeiture case set to be lifted, DOJ and the Khachatryans also agreed to settle their outstanding forfeiture claims. The Holmby Hills estate can now be sold unimpaired, and proceeds from the sale will be shared between the parties. The proceeds from the sale of the Holmby Hills estate will be distributed to the Khachatryans, while other proceeds from the sale are designated to be sent to the Republic of Armenia, at the request of the Khachatryans. The final disposition of the latter proceeds will be subject to continued discussions between the Khachatryans and the Republic of Armenia.”

Ephraim (Fry) Wernick (Former Assistant Chief / Lead Trial Attorney, Criminal Fraud Section & FCPA Unit) was among the Vinson & Elkins attorneys representing the Khachatryans and below is his LinkedIn post about the matter.

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