LOS ANGELES—The California state bar has recommended that Rita Mahdessian be disbarred for her role in embezzling thousands of dollars from funds related to settlements involving heirs of Armenian Genocide survivors.
The state bar has asked that the California Supreme Court strip Mahdessian of her ability to practice law after it found her guilty of embezzlement from a multi-million dollar fund earmarked as a settlement for the relatives of Armenian Genocide survivors who through case won settlements from insurance companies.
The bar has also said that there was enough evidence that Madessian willfully misled a judge, and committed fraud.
In its recommendation for disbarment, which was published on August 29, the state bar said that Mahdessian misappropriated $30,000 of a $300,000 reward, which was granted to a non-profit that operated out of her office.
“We are dismayed by the news that a judge of the California State Bar Court has found that some funds from the Armenian Genocide insurance settlement were misappropriated. If the decision becomes final or is affirmed on appeal, we hope these funds will be returned and used to serve the Armenian community as intended,” said Kate Nahapetian, Executive Director of the Armenian Legal Center for Justice and Human Rights explained.
In August 2016, the California State Bar filed separate charges and cases against Mahdessian and her husband, attorney Vartkes Yeghiayan, alleging that the two had diverted funds earmarked for non-profits doing research on the Armenian Genocide to pay for, among other things, their children’s law school tuitions.
Jonah Lamb, a state bar spokesman, told the Glendale News Press that the case against Yeghiayan was postponed due to his health issue. Lamb also said that it was unclear when the state Supreme Court would rule on the Madhessian case.
The couple has denied the charges and has appealed the decision.
The ruling centers on a $300,000 award stemming from a $20 million settlement from the AXA and New York Life insurance companies, which sold policies to Armenians during the Ottoman rule. A class action lawsuit in 2005 awarded descendants of Genocide victims.
Mahdessian and Yegiayan were awarded $300,000 of a $3 million Unclaimed Benefits Fund, which was used to open two non-profit organizations—Center for Armenian Remembrance and Conservatoire de la Memoire Armenienne—which were based out of the couple’s Glendale law firm.
Mahdessian deposited funds in an investment account, which was opened in her daughter’s name, according to court documents, which also state that she “then continued to maintain control over the funds, about which the daughter had no knowledge until being subpoenaed by the state bar to testify in this matter.”
The state bar ruled that Mahdessian’s “misconduct has resulted in significant harm. She inappropriately misappropriated $30,000 of CAR [Center for Armenian Remembrance] funds that have not yet been returned. Her dishonest mischaracterization of Various transactions in a way to avoid taxable consequences creates tax liabilities for her children and potential legal problems for CAR,” according to the bar ruling.
The bar also added that the couple used the funds for personal expenses, including payments for their children’s education.