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Attorney recommended for disbarment for taking money meant for Armenian genocide survivors

The State Bar Court of California has recommended that a Southern California lawyer be disbarred for misappropriating $30,000 from a trust fund for Armenian genocide survivors, using other trust money to pay for her children’s law school and failing to properly report the transactions to tax authorities.

A State Bar Court judge found that Rita Mahdessian, 58, [#141901] was culpable for misappropriating funds from a trust she and her husband were hired to administer, according to court documents.

Mahdessian and her husband, Vartkes Boghos Yeghiayan, 81, [#41773], received notice of disciplinary charges on Aug. 18, 2016 for allegedly misappropriating $385,000 meant for Armenian Genocide survivors.

According to court documents, in 2005 Yeghiayan and Mahdessian received in trust a $20 million settlement in a class-action lawsuit against New York Life Insurance Co. and AXA, S.A. on behalf of heirs and descendants of persons killed during the Armenian Genocide of 1915-1918.

Shortly after, Yeghiayan and Mahdessian created two nonprofit corporations – the Center for Armenian Remembrance (CAR) and Conservatoire de la Memorie Armenienne (CMA). Articles of incorporation for both nonprofits list the Glendale business address of the couple’s law firm, Yeghiayan & Associates.

Over several years, multiple questionable transactions took place in both CAR and CMA bank accounts. Court documents trace check deposits from the settlement fund to the couple’s nonprofits and their law firm. Records also reveal other unauthorized payments and transfers, including repayment of loans, payments to Loyola Law School and transfers to Mahdessian’s daughter.

In one instance, Mahdessian created an account in her daughter's name and then deposited $30,000 from one of the trusts. Mahdessian justified the transfer by saying it was a repayment of a loan from her daughter. But no such loan had ever been made. None of those funds have yet to be returned to the trust. She used another fund’s monies to pay for law school tuition for her children.

The State Bar Court found that Mahdessian had misled a judge, failed to maintain funds in a trust account and committed moral turpitude.

The State Bar Court ordered that Mahdessian be placed on involuntary inactive status.

The final decision on Mahdessian’s disbarment rests in the hands of the California Supreme Court.

The case against Mahdessian’s husband stands in abatement because of illness.

A special deputy trial counsel was appointed to prosecute Mahdessian’s attorney discipline case in accordance with rule 2201, which sets out a process for the Chief Trial Counsel to recuse the office to avoid actual or potential conflicts of interest.

The State Bar of California received more than 15,000 complaints in 2016. As a result of disciplinary actions taken by the State Bar of California, nearly 200 attorneys were disbarred in 2016 and the Client Security Fund paid out more than $8 million to victims of attorney misconduct.

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The State Bar of California’s mission is to protect the public and includes the primary functions of licensing, regulation and discipline of attorneys; the advancement of the ethical and competent practice of law; and support of efforts for greater access to, and inclusion in, the legal system.