AXA Settlement Fund Board Claims Embezzlement/Irregularities in Insurance Payments to Genocide Heirs
On May 26, 2014 the board set up to monitor the disbursement of a US $17.5 million compensation package, won in 2005 in a class action lawsuit against French insurer AXA for failing to pay death benefits for the insurance policies purchased by Armenians living in the Ottoman Empire prior to the 1915 Genocide, issued the following statement alleging widespread irregularities in the payment process and misappropriation of funds.
Given the legal nature of the dispute, Hetq has decided to publish the statement in full without modification.
About 7 years after its nomination, the AXA SETTLEMENT FUND BOARD would like to report about its action towards the heirs of the Armenian insured victims of the genocide of 1915. The scope of this action had been defined in the Settlement Agreement concluded in November 2005 between AXA and the “CLASS COUNSEL” formed by the American lawyers, Mark GERAGOS, Brian KABATECK and Vartkes YEGHIAYAN (the Lawyers), then validated by the Court of the Central District of Los Angeles, on May 16th, 2006.
On June 7th, 2006, AXA paid the amount of 17, 5 million to the Lawyers. The AXA SETTLEMENT FUND BOARD (the Board) consists of three French members: Samuel SHNORHOKIAN (Paris), Hilda TCHOBOIAN (Lyon) and Zaven GABRIELIAN ( Marseille); it had been appointed on August 2nd, 2007 by the American judge of the central District of Los Angeles, Christina SNYDER, after a proposal of three American lawyers.
By making public the assessment of its voluntary action, the Board would like to enlighten the publicabout the work which it carried out within the framework of the skills which were recognized by the Settlement Agreement signed with AXA; it will also be unfortunately led to announce anomalies and abuse which it noticed in the management and the distribution of the funds by the administrator of the office located in Los Angeles, and which it denounced from 2011 with the American judge.
The agreement with AXA awarded to the Board a unique skill, that to watch the just distribution of funds between the heirs of the victims of the genocide having taken out an insurance policy before 1915 with the French companies.
By virtue of this agreement, three American lawyers had the responsibility of the allocation of funds to the non-profit organizations of the Armenian community of France. (Cf. ANNEX 1 – « Settlement Agreement » dated November 18th, 2005 – Page 10 – Article VI – Paragraph 2)
On September 7th, 2007, the Board was informed by the American lawyers of the existence in Los Angeles of an office put under the responsibility of an administrator committed for one year, Parsegh KARTALIAN, who would oversee the examination of files and their classification in 4 categories, according to the proofs of filiation brought by the applicants.
Having managed previously the office of the compensations of the New York Life case, the administrator, Parsegh KARTALIAN, benefited from a preliminary experience.
The lawyers thus transmitted to the Board their decision to employ the same administrator, to rent the same premises in Los Angeles, and to follow up with the same selection criteria as those used for the compensation of the legal successors of New York Life.
According to figures given by the administrator, Parsegh KARTALIAN, 13.751 claims for compensation coming from 32 different countries were received in Los Angeles, between April 1st, 2007 and January 7th, 2008, deadline for the claims.
After several meetings with the lawyers in France, a visit to the office in Los Angeles was organized for the Board members in March 2008, in order to familiarize them with the processing methods of claims. On this occasion, the administrator and the lawyers introduced them to another lawyer, Berj BOYAJIAN, not being a member of the process of AXA, but practicing in the same building, as a person able to assist, at the same time, the administrator and the Board in the instruction of claims.
From then on, one of the lawyers of “AXA CLASS COUNSEL “, Brian KABATECK, was in charge of requesting periodically the Board so that this latter authorizes the payment of the office running costs in Los Angeles, according to overhangs in the examination of the claims.
For its part and during the year 2009, the Board had to verify 2893 claims with the arbitration in mind for the cases hard to classify. Later, this work that last several months was disputed by the lawyers of the “Class Counsel” which considered that the Board was too generous in its evaluations, and wished to entrust the revision and the correction of these evaluations to Berj BOYAJIAN, considering his experience as member of the Settlement Funds in the NEW YORK LIFE case.
The Board was neither informed about the sending on January 29th, 2010, of the answers to the applicants, by the office of the administrator, nor that the list of the indemnified heirs, had been put under seal by the lawyers. Following this sending, the Board members received protests from several countries about irregularities noticed in the allocation of funds. Ignoring everything of the final allocation, the Board asked to the administrator Parsegh Kartalian to hand it the definitive list of the beneficiaries, but this one refused to do so, calling upon the ban on transmitting the aforesaid list ordered by the Lawyers.
On February 5th, 2011, the lawyer, Brian KABATECK submitted to the Board, for approval, a bank statement of the AXA Settlement Fund, asking among others, to propose names of associations which could benefit from the allocation of a balance amount of US$ 346,050 and to authorize the closing of the account as well as the destruction of the “non-historical” files, to end officially the action of the Board.
The process seemed doubtful, because the Board had to validate accounts that it had not seen, to decide on associations to attribute this balance amount while its opinion had never been requested for the previous attributions, and finally to authorize to destroy “non-historical” documents, all this before any control of the accounts. These documents would have been a precious source of studies for the historians and the researchers on the real-life of the Armenian families during the genocide.
The Board thus refused to sign this document and requested to examine all the accounting documents before authorizing the closing of the accounts.
In front of the refusal of the lawyers to transfer the accounting books to France, the Board suggested to travel to Los Angeles in order to check them (Cf. ANNEXED 2 and 3) and then give full discharge for the closing of the accounts, what the lawyers refused on the pretext of unavailability.
Further to the insistence of the Board, Attorney Geragos sent to France a big account book, concerning the AXA case. The examination of this only file revealed several irregularities with regard to clauses mentioned in the agreement of November 2005 (” Settlement Agreement “).
On April 5th, 2011, the Board wrote to the American Judge Christina Snyder, telling its difficulties met with the lawyers, and requesting the authorization of the Court to check the whole accounting. Besides, the Board asked to the Judge to refuse any demand for destruction of documents relevant to the AXA case.
Without any answer from the Judge, the three Board members decided to go to the United States from April 22nd till April 30th, 2011 in order to get an audience, at their own expenses.
Finally, further to repeated demands, on April 28th, 2011, Judge Christina Snyder granted an audience to the Board members, where she ordered Mark Geragos and Brian Kabateck to transfer immediately the requested documents to France; however she denied to the Board the right to check all of the accounts.
On May 13th, 2011, a parcel containing accounting documents was sent to France.
After an examination of these documents received on May 16th, 2011, the Board discovered different kinds of anomalies:
-Misappropriation by Berj BOYADJIAN of checks for insurants, for his personal profit and for the benefit of his friends or his family (Files 226 (Cf. ANNEX 4) and 234 (Cf. ANNEX 5) – Case 2:02-CV-01750-CAS-Mc)
– Checks drawn to associations with ambiguous endorsements, deposited in different accounts (Cf. ANNEXE 6) (Copies of 6 checks drawn to CATHOLICOSSAT)
– 2, 5 million US DOLLARS deposited in another bank account (Files 159-1 (Cf. ANNEX 7) & 160 (Cf. ANNEX 8) Case 2:02-cv-01750-CAS-Mc)
– Exaggerated expenses by the lawyers (Cf. ANNEX 9 – Exhibit 1 – Transaction Details)
– The Settlement Fund Board wrote to the Judge, to inform her about these anomalies which could constitute embezzlements, noticed and revealed during the examination of the accounting documents in its hand, still asking her to authorize the Board to make a complete checking of the accounts, otherwise to appoint an independent office to make an audit.
Now, the Board was surprised by the decision of the Judge dated February 1st, 2012 (Cf. ANNEX 10, 10-1 and 10-2 – Rows 196 – 196-1 – 196-2), choosing the lawyers Mark GERAGOS, and Roman SILBERFELD representing Vartkes YEGHIAYAN, to check the accounts and to audition two suspects, Parsegh KARTALIAN and Berj BOYAJIAN (Cf. ANNEX 4 – Line 226).
Today, the Settlement Fund Board wonders about the following facts:
– Why the list of the indemnified successors was put under seal and not transmitted to the French Board, while the lawyer Brian KABATECK on November 27th, 2007 informed the administrator 4 Parsegh KARTALIAN, that he would officially transfer the control of all the operations relevant to allocations to the Board?
– Why, in 2011, the American lawyers wanted the validation of the accounts by the Board to close them in a rush, and destroy “non-historical” documents, without submitting the accounting documents to the Board?
– How could the lawyers ignore the existence 2, 5 million US DOLLARS deposited in a new bank, “forgotten” according to the testimony of the administrator Parsegh KARTALIAN on June 2nd, 2011, during the hearing ordered by the Court following the revelations by the French Board on the irregularities noticed during the examination of documents in May, 2011?
– Who opened this account in another bank?
– Who benefited from checks drawn in the names of the indemnified, which the latter never received?
– What is the exact amount of the embezzlements?
– How was Berj BOYAJIAN able to get checks for the indemnified for himself, which he was able to deposit in accounts belonging to him?
– Why did the Judge not appoint an independent office to make an audit of the accounts, while the protests of the Board revealed embezzlements, the final responsibility of which is not established today?
Although it does not come within its remit, the Board observes that the allocation of 3 million US DOLLARS to the non-profit organizations, as well as the balance amount after the payment of the compensations to individuals, was not following the clauses of the agreement dated November 2005, signed with AXA; this one stipulated that the aforementioned associations had to be the ones of the Armenian Community of France. Now, not only the Lawyers did not fully distribute the sum of 3 million US DOLLARS added to the balance amount, but they allocated an important part of this compensation to other countries than France.
Furthermore, even a partial checking by the Board revealed that certain French associations, appearing on the list of the beneficiaries, have never received the corresponding checks. Checks drawn to associations with illegible endorsements have been misappropriated and deposited in various accounts.
On the other hand, concerning the compensation of the three lawyers, the Settlement agreement of 2005, signed with AXA, planned the payment of an amount which should not have exceeded 1 million US DOLLARS for each of them; now, besides, the first million they cashed in 2007, every lawyer was given important additional sums in order to cover “unforeseen” expenses for management or travels.
Moreover, upon request of the lawyers, and considering the disagreements arisen between them, Judge Christina SNYDER decided to award to each lawyer, one third of the remaining sums so that they distribute it as they wish to associations of their choice.
Finally, the Board refused to sign a discharge dated March 31st, 2014, which stipulated that the parties would not have the right any more to denounce embezzlements regarding the allocation and the management of funds. Following this refusal, and after a proposal of the lawyers, the Judge ordered the payment of a symbolic sum to the Board, much lower than amounts due in reimbursement of committed expenses and the allowances mentioned in the agreement of November 2005 between the “Class Counsel” and AXA.
We hereby confirm that the Board had given the reimbursement of its first own allowances to a state-approved association, received on January 13th, 2010.
The AXA Settlement Fund Board intends to get right to the bottom of this case.
Photo: AXA Settlement Fund Board member Hilda Tchoboian