Sons of Yerevan Minister Sell Hollywood Mansion
In the Armenian press, the country’s former Minister of Finance, Gagik Khachatryan, has sometimes been called the “superminister” for his large and allegedly ill-gotten fortune, the provenance of which is still largely unexplained.
Despite listing his ministerial salary of US$ 23,600 as a sole source of income in 2015, Khachatryan also declared assets totaling $2.35 million.
But even that declaration is apparently quite modest for the Khachatryan family. As reported last summer in Hetq.am, an Armenian news site, the former minister’s two sons bought a sprawling house in the affluent Los Angeles neighborhood of Westwood for $11 million in 2010 (the Birndorf family, the former owners, had been asking for $12.5 million).
Last week, Gourgen and Artyom Khachatryan sold the house for $18.8 million after coming down from an initial asking price of $35 million.
The Armenian government has shown little interest in how the family of a public servant can afford such luxury. The country’s National Security Service (NSS) had been investigating Khachatryan -- but the investigation was halted just two weeks after Hetq.am’s revelation of the Hollywood house in July 2016. The NSS now confirms that it never sought legal assistance from the United States for the investigation.
Hetq.am has been trying to access the relevant documents to discover what happened to the investigation, so far without success. Both the NSS and the prosecutor’s office refused a Hetq.am request to provide copies of the decision to drop the case, arguing that they had no legal obligation to do so.
Armenian cabinet ministers are banned from serving as directors or managers of private companies. The story of how the Khachatryans gained their wealth is hidden within a web of companies whose shares are controlled by various members of the family. But what is clear is that the family’s wealth grew in line with the career, and power, of the elder Khachatryan.
Gagik Khachatryan rose from modest Communist Party posts in Soviet times, worked in the State Revenue Service, and eventually became Minister of Finance, a position he held for two years before resigning in September 2016.
The minister’s two sons, along with their wives, are officially registered as residents at 66 Teryan Street in the Armenian capital Yerevan. It’s a nice enough high-rise apartment building opposite the Yeritasardakan metro station, but it certainly doesn’t compare with the house at 355 South Mapleton Drive in Los Angeles, which is considered prime real estate even by Hollywood standards.
The street is located in the Holmby Hills section of Los Angeles, a street known as “Billionaires’ Row” for the expensive homes on the block. The list of erstwhile and current residents includes such names as Google Chief Executive Officer Eric Schmidt, Hugh Hefner, Ellen DeGeneres, and Formula One heiress Petra Stunt.
The house - which measures 563 square meters on a plot of 6,637 square meters - was built in 1939 by motion picture pioneer Allan Dwan, who founded one of the first studios in Los Angeles and made such film classics as the 1922 Robin Hood, starring Douglas Fairbanks and Wallace Beery. It was later used in the movie Mommie Dearest, about Hollywood Golden Age star Joan Crawford.
After buying the house in 2010, the Khachatryan brothers transferred it to a family friend, Abraham Stepanian, the following year, making him its trustee through a company he owns, Veto Trust. Such arrangements are often made to shelter a property’s real owners from various taxes and debt obligations. There are no known documents showing that any money changed hands. At one time, Stepanian was listed as living at the same address as Gourgen Khachatryan in Toluca Lake, California.
There was, however, a quitclaim deed -- a legal instrument which is used to transfer real estate property between family members, as gifts, or to place personal property into a business entity.
This isn't the only property the Khachatryans own on South Mapleton Drive. On Aug. 5, 2011, Gourgen Khachatryan and Stepanian’s Veto Trust bought a house at 530 South Mapleton Drive for $14.4 million. A February 2016 satellite image shows that the house has been razed to make way for new construction.
The Khachatryan siblings’ impressive holdings are significant because Armenian cabinet ministers often work around the ban on managing private companies by placing their assets in the names of family members. The Khachatryan family’s current assets include 100 percent ownership of a food importer and a large stake in UCom, an Armenian telecommunications company, both owned by the minister’s cousin Aram. In addition to the Los Angeles properties, his sons also own Galaxy Concern LLC, an Armenian investment and trading company. Until 2014, they also owned an importer of Mitsubishi vehicles.
Both Gourgen and Artyom hold positions at several of these family-owned companies. Gourgen is chairman of the board of UCom and is listed in company documents as executive director for business development at Galaxy Concern, where his brother Artyom is executive director.
Hetq.am asked the US Embassy in Yerevan about the visa status of the Khachatryan brothers. Citing the US Immigration and Nationality Act of 1997, the embassy responded that State Department records related to visa decisions are confidential and cannot be released to third parties.
In an interview with Hetq.am, Gourgen Khachatryan shied away from specifics when explaining where he and his brother got the money to buy their Los Angeles properties, insisting that the money came from “business savings.” Asked if perhaps Armenia would benefit if the money was invested in their home country, Gourgen said that he and his brother have carried out numerous social programs in Armenia, but never sought publicity.
“I don’t deem it useful to reveal the scope or nature of the social projects we have carried out. If you are personally interested in knowing, you can investigate the matter further and see what we have done, and are doing,” Gourgen Khachatryan said.
Radio Liberty asked Gagik Khachatryan if he had recently assisted his sons in either their business ventures or had helped them purchase Hollywood property. Khachatryan replied: “Every person is obligated to respect the private life of another and must not get involved in the publicizing of information regarding problematic issues, even if it relates to one’s sons.”