A forgotten genocide, ‘blood money’ and justice betrayed
Legal settlements sought to help make amends for the slaughter of Armenians. They were corrupted by fraud.
They were bayoneted in their homes. Drowned in the Black Sea. Shot. Tortured in front of crowds. Forced to convert. Forced into prostitution. Burned alive. Poisoned. Driven into the desert to die of thirst. Their bodies were thrown in pits, torched, eaten by dogs and picked over by vultures.
By many estimates, a million Armenians died in the Ottoman Empire between 1915 and 1920, one of the first genocides in a century that would be defined by mass killings. Ignored by most of the world and denied by the Turkish government, the Armenian slaughter was considered for generations a “perfect genocide,” its victims forgotten, its perpetrators unpunished.
Then, in the mid-2000s, court cases in Los Angeles, home to one of the largest Armenian communities outside Armenia, delivered a measure of justice that history had long denied. Three Armenian American attorneys sued to collect life insurance policies on victims of the genocide, and came away with a pair of class-action settlements totaling $37.5 million. Finally, in an American courtroom, the genocide was treated as fact.
In the decade that followed, however, the much-hopedfor reparations devolved into a corrupted process marked by diverted funds and misconduct that even the lawyers involved characterized as fraud, The Times found in an investigation that drew on newly unsealed case filings, other court documents, interviews and official records.
More than $1.1 million in a settlement with a French insurer was directed at various points to sham claimants and bank accounts controlled by a Beverly Hills attorney with no official role in that case, according to court filings and financial records. A French foundation that was supposed to distribute millions in settlement funds to charity was never set up, and some $1 million of that
money ended up at Loyola Law School, the alma mater of two attorneys in the case, according to an accounting provided by the school.
In addition, Christian churches that were supposed to get hundreds of thousands of dollars in settlement funds told The Times that they did not receive the money.
Armenians who stepped forward to collect on ancestors’ policies in the settlement with the French insurer had their claims rejected at an astonishing rate of 92%, court records show. Applicants were denied despite offering convincing evidence such as century-old insurance records, birth certificates, ship manifests, hand-drawn family trees and copies of heirloom Bibles.
“It was for us blood money — blood of the people killed in the genocide,” said Samuel Shnorhokian, a retired French businessman who served on a court-approved settlement board and has tried for years to persuade the FBI and other agencies to investigate. “We never thought there would be misappropriation of funds.”
The insurance settlements had their origin in the bedtime reading of a Glendale lawyer named Vartkes Yeghiayan. It was 1986, and many Armenian Americans were worried about keeping the memory of the genocide alive. Few Americans had heard of the massacres, and then-President Reagan refused to even support a day of commemoration for fear of angering Cold War allies in Turkey. Yeghiayan, the son of a genocide survivor, was plodding one night through the memoirs of a former U.S. ambassador to the Ottoman Empire when he stumbled on a passage about victims’ life insurance policies.
Ambassador Henry Morgenthau Sr. wrote that in the middle of the slaughter, the Turkish interior minister had demanded a list of Armenians with American life insurance, saying, “They are practically all dead .... The government is the beneficiary now.”
At home in Glendale, Yeghiayan leapt up, as he later recalled in speeches and interviews, exclaiming, “There is a list! We have to find this list!”
He spent much of the next 13 years researching the policies. He placed ads in Armenian newspapers seeking families who held on to ancestors’ insurance documents, and combed through archives in Washington; Geneva; Aleppo, Syria, and elsewhere. He found a 1919 letter in which a lawyer for New York Life estimated the potential cost of the mass killings of Armenian customers at $7 million, a sum equal to more than $100 million in today’s dollars. Yeghiayan believed the carrier had not paid the victims’ heirs.
He came to see collecting those policies as a way not only to compensate families but also to establish the genocide as beyond dispute. In those years, his quest for justice was lonely and low-budget. At one point, Yeghiayan used the Glendale Public Library to print 594 pages of microfiche records, feeding dime after dime into the machine. His already modest law practice suffered. He fell behind on his taxes and filed for bankruptcy.
Finally in 1999, Yeghiayan had enough evidence for a lawsuit against New York Life. Three years later, he sued the French insurance giant AXA.
Facing down global corporations with squadrons of wellpaid attorneys, Yeghiayan recognized he needed a legal gun of his own.
Mark Geragos was then a rising star in L.A. law. He practiced mainly criminal defense at his family’s downtown firm, and he had attracted national press representing Clinton family associate Susan McDougal during the Whitewater investigation.
In the years that followed, he amassed a clientele that kept him in the spotlight, including Winona Ryder, Michael Jackson and murderer Scott Peterson.
At Yeghiayan’s invitation, Geragos signed on to the insurance litigation in 2001. The team already included up-andcoming class-action lawyer Brian Kabateck, who would go on to become a prominent plaintiff ’s attorney and president of the L.A. County Bar Assn.
The three attorneys were Armenian Americans, part of a proud and active L.A. ethnic group of more than 200,000, and the genocide cases offered them an attractive combination of community service and financial gain. When the insurers agreed to pay — New York Life, $20 million in 2004; and AXA, $17.5 million a year later — more than $7 million went to legal fees and associated costs, court records show.
Both settlements mandated that the lion’s share of the money would go to individuals who could produce evidence they were descendants of the Armenian policyholders. Beyond that, charities serving the Armenian community would get $3 million, along with whatever money was left over after paying descendants.
The New York Life case ran smoothly with a committee of prominent L.A. Armenians appointed by the state insurance commissioner, including current City Councilman Paul Krekorian, vetting applications. People submitted government records and accounts of how relatives perished and survivors rebuilt lives in Fresno; Yerevan, Armenia; Marseille, France; Beirut and elsewhere. One family sent a piece of fabric from the tent their grandmother had slept in after being marched into the desert to die. Another shared a photo of its patriarch standing in front of his sewing machine shop in Harput in the Ottoman Empire, in a region of modern-day Turkey.
Ultimately, the committee approved 44% of claims, according to a news release.
It was in the second case that red flags emerged. That settlement, with Paris-based insurer AXA, designated up to $11.35 million for descendants. Decisions about whether applications were legitimate or not were to be made by a board of three prominent French Armenians, according to the settlement terms and court filings.
Months before the French board’s appointment, the attorneys — Kabateck, Yeghiayan and Geragos — established important parts of the approval process in Los Angeles, according to court records and lawyers’ emails later turned over to authorities.
They installed as settlement administrator — the coordinator of the claims process — a courtroom interpreter from Glendale who had helped run the New York Life settlement. They instructed him to hire staff and set up operations in downtown L.A., in the same Wilshire Boulevard office used for the New York Life case.
The arrangement put the process of deciding who got money 6,000 miles from Paris, making it difficult for the French board to provide any meaningful oversight.
“The fact we were in France, we didn’t know how they were working and what they were doing,” said Shnorhokian, the board member and retired Parisian executive.
“It was practically impossible,” said board member JeanCharles Zaven Gabrielian, a surgeon in Marseille. The board did not object to the process or to the selection of the settlement administrator because, as Gabrielian explained: “I trusted them.”
An email Kabateck wrote to the two other lawyers in 2008 suggests they saw a particular benefit in preserving that trust: “It is important to keep good feelings from the board; it will be easier later to persuade them to be conservative on their claims decisions.”
As it turned out, the process set up in L.A. resulted in a tiny fraction of applicants receiving money and a pool of cash left over.
The Times requested interviews with Geragos and Kabateck about the litigation; Yeghiayan died in 2017. Neither attorney agreed to speak with reporters, but each provided written responses.
Shant Karnikian, a law partner of Kabateck, said in a letter to The Times that the instances of fraud that emerged later in the handling of money were a result of the actions of others, including the settlement administrator and another attorney.
Asked about the email referencing a need for the board to be “conservative,” Karnikian said the attorneys wanted to ensure claims were “not just unconditionally rubberstamped” for approval.
“Class counsel worried about unsubstantiated (and potentially false) claims being liberally approved thus reducing the overall amount left for legitimate substantiated claims,” Karnikian wrote.
Some class-action lawsuits are straightforward. Lawyers win a pot of money for a group harmed by a company or organization. Consumers get a notice in the mail that they are eligible for a payout. They sign a form and receive a check. Deciding who got money from the genocide cases was more complicated. Armenians who f led the massacres often left everything behind, including insurance documents. Families scattered across continents, their names altered by immigration authorities or the alphabet of their new home. Stories were passed down, but with each passing generation, there were fewer people with firsthand information.
In an apparent acknowledgment of the unusual circumstances, the AXA settlement set a low bar for approving claims. Though the ultimate decision belonged to the board, the terms stated that if an applicant submitted as little evidence as a sworn declaration outlining how he was a rightful heir to a listed policyholder, it could be considered sufficient proof for payment.
But when French board members made a brief visit to L.A. in March 2008 to get a briefing on the claims process they were ostensibly supervising, they said they were told that much stricter criteria were already in use for preliminary decisions. Applicants had to correctly identify the city of residence their long-dead relatives had listed in insurance records to be considered for approval. If they got the city wrong, the application was rejected — no matter the other evidence presented.
Shnorhokian, the French board member, said the attorneys told him and his colleagues that this was the same standard used in the New York Life evaluations. That was not true, according to board members for the New York Life claims. They said in interviews that evaluators used a holistic approach based on submitted records and did not disqualify applicants solely for incorrectly identifying the city of residence.
Asked about the city-of-residence requirement, Kabateck’s law partner, Karnikian, said, “Any such criterion was not — and could not be — imposed by class counsel.”
The new criterion appears to have had a profound effect: Accountings in court records show that less than 8% of AXA claims applications were approved for payment. One result of the low approval rate was that millions of dollars in the settlement accounts could be used, per the wording of the settlement, for charitable purposes.
Those rejected on the city-of-residence basis included people who had provided what appeared to be overwhelming evidence that they were rightful heirs, according to archived files reviewed by The Times in recent months. Some who were denied had sent copies of their ancestors’ insurance policies — among the strongest possible proof that they had valid claims. The archived files suggest evaluators dismissed applications without reviewing the evidence, writing: “cities don’t match.”
Even when evaluators took the time to go through the documents, the city of residence overrode other evidence. Sylvia Bergin, a British retiree, submitted a claim for her grandfather’s policy with copies of birth certificates, police records and passports. The evaluator in downtown L.A. found Bergin’s application convincing, writing in her file “it is evident” she was the granddaughter of the policyholder.
“However, the place of residence of the insured … and the place of residence on the claim form (Rodosto, Turkey) do not match,” the evaluator wrote. Her claim was rejected.
Told of the evaluation by The Times, Bergin disputed that she had gotten the city of residence wrong, noting that she and her parents had visited her grandparents’ former home in Rodosto in the 1970s.
“It makes me sick,” Bergin said. “They are Armenians supposedly acting on behalf of Armenians, and things are not done right.”
The settlement administrator, Parsegh Kartalian, declined to answer questions, saying he had memory loss from brain surgery and other medical problems.
As the evaluation process drew to a close in 2009, the L.A. office shipped the French board about a quarter of the claims for review. Though the wording of the settlement vested board members with the power to approve and deny claims, they had played almost no role in evaluating applications to that point. As they read through the sampling of files from L.A., the board members concluded that many marked for rejection should be approved.
When they tried to correct what they saw as errors, Geragos intervened and warned the French board members in a letter that they might be sued. He wrote: “It is our recommendation that the Settlement Board immediately reassess the purported approval of claims.”
The board stood down.
Decision letters from the AXA case started going out to Armenians around the world in early 2010. The vast majority carried bad news: 12,795 out of 13,856 applications were rejected. The uproar was swift. “Who received my grandfather’s insurance sum instead of me if I had sent all needed documents which proved that I am the heir of the Insured,” an indignant applicant wrote to the lawyers in one of many complaint letters submitted to U.S. District Judge Christina Snyder.
Another denied applicant wrote that he had sent 23 records to prove he was a descendant and had been counting on the money for heart surgery.
“My paternal grandparents were beheaded at my father’s presence,” he wrote. “Honestly I’m so disappointed.”
Many complained that they were denied while close relatives received checks. In one instance, twin sisters and their brother in Armenia sent nearly identical applications on the same day from the same post office, according to another letter. Only one sister was approved.
“Our sister doesn’t want to share her money with us! She thinks that is not her problem but yours!” the man wrote.
Six cousins trying to collect on their grandfather’s policy said they had used similar proof, yet only three received checks. A cousin in Cyprus fumed, “Is there any possible legal explanation … because we are all baffled!”
Armenia’s Ministry of Justice, which had helped citizens prepare their applications, also wrote to the judge in L.A. in June 2010, saying officials were “extremely dissatisfied” and wanted court intervention.
“Otherwise it is not clear what the purpose of this process was,” the ministry wrote.
In his law office on Brand Boulevard, Yeghiayan, the man who had dreamed up the litigation, became increasingly distraught. He was deluged with calls, emails and letters. Furious Armenians denounced him and the other lawyers as “worse than Turks,” he emailed Kabateck and Geragos. The heroic cause that had been his life’s mission was falling apart.
Yeghiayan trained his frustration on the other attorneys. He filed an emergency motion asking the judge to order an independent audit of the settlement, alleging Geragos and Kabateck had splurged on first-class travel and treated the descendants’ money as “petty cash.”
The accusations seemed to enrage Geragos, who excoriated Yeghiayan in an email: “Your motivation in making these defamatory and knowingly false statements is driven solely by your desperate financial situation.”
Geragos and Kabateck told the judge in a lengthy filing that Yeghiayan did “not have a scintilla of proof ” and, regardless, the settlement didn’t allow revisiting the claims decisions. They reassured the judge that to them, this was “more than just a class action.”
“It is a sacred task that Brian Kabateck and Mark Geragos are honored to prosecute on behalf of the Armenian people,” they wrote.
The judge, Snyder, turned down the request for an independent audit. She declined to answer questions about the litigation, saying through a deputy that the judicial code of conduct prohibited her from commenting.
In February 2011, the French board received an email from L.A. that stopped them cold. Kabateck and Geragos wanted to dissolve the settlement board and destroy the claims files that had come in from around the world, part of the materials they described as “any and all files and non-historic documents.” Those same materials in the New York Life settlement had been deemed so precious — in the lawyers’ description, “a wealth of historical data that record the Armenian genocide” — that they were under lock and key at USC’s Shoah Foundation for future scholarly research.
Beyond the cultural value, the board saw the records as central to ensuring that mistakes hadn’t been made. Though the claims office was by then closed, the board was still looking into complaints and had asked to review records related to which applicants were paid and which were not.
Troubled, the board refused to sign off on the shredding of documents. Instead, members promised to travel to L.A. to investigate.
Kabateck’s response unsettled them further. He emailed that he was too busy to meet and that Geragos had taken over, writing, “My file is closed.”
“Rat fleeing a sinking ship,” Yeghiayan remarked to a French board member in an email later turned over to authorities.
Kabateck’s law partner, Karnikian, offered no explanation for the email to the French board seeking to destroy the documents. The subsequent filing to the judge for permission to destroy the documents was “a misunderstanding,” likely by junior lawyers who prepared the brief, Karnikian said. He claimed the filing was “withdrawn within hours.” A review of the docket shows the filing was never withdrawn and was discussed at hearings and referenced in other court documents for years afterward.
Alarmed by the attempt to close down the settlement process and dispose of the records, the French board went directly to the judge, asking in a letter that the files be “kept safely” until members could come to Southern California. At an April 2011 hearing, the board laid out its complaints in person. Snyder, the judge, agreed the board should have a chance to review the records.
It wasn’t long before serious irregularities were discovered.
‘It was for us blood money — blood of the people killed in the genocide.’ — SAMUEL SHNORHOKIAN