State bar announces probe of L.A. lawyers Geragos, Kabateck over Armenian genocide settlement

The State Bar of California announced Tuesday that two prominent Los Angeles attorneys are under investigation for their conduct in a landmark, multimillion-dollar settlement for Armenian genocide victims.

The public disclosure that lawyers Mark Geragos and Brian Kabateck are under scrutiny came six months after a Times investigation revealed how the historic legal case devolved into corruption, diverted funds and disillusionment for ethnic Armenians around the world hoping for compensation.

The announcement by the state bar was highly unusual on two fronts: The agency’s investigations of lawyers are normally conducted in secret. And it has a reputation for shying away from probes of powerful attorneys, most clearly illustrated by its decades-long failure to rein in Tom Girardi, the now-disgraced megalawyer.

Ruben Duran, chair of the state bar’s governing board, opted to waive confidentiality under a little-invoked statute that allows officials to publicize an ongoing inquiry when it advances the agency’s stated mission — protection of the public.

“Confidence in our ability to do so has unfortunately been shaken in recent times by the Girardi matter and what it represents,” Duran said in a statement. “Restoring and maintaining the public’s trust in the disciplinary apparatus of this agency is imperative.”

Geragos and Kabateck did not respond to messages seeking comment.

Both men are influential figures in the L.A. legal community and beyond. Geragos, a criminal defense specialist, has represented celebrities including Michael Jackson, Winona Ryder and Chris Brown and was for years a CNN legal pundit.

Kabateck, a civil litigator, has served as president of the L.A. County Bar Assn. and chair of Loyola Law School’s governing board. Judges have tapped him repeatedly to be lead counsel in high-profile class-action cases, and he is representing thousands of L.A. ratepayers in a $67-million class-action settlement over inflated bills from the Department of Water and Power.

Duran appeared to reference the two lawyers’ standing in his statement, saying, “The status of attorneys, or the size of their practice, cannot and will not impact our decisions to investigate misconduct.”

The scope of the investigation was not detailed in the bar’s news release. If the agency charges a lawyer, they face penalties that include suspension from the practice of law and the loss of their license entirely. The state bar emphasized that both attorneys are presumed innocent while under investigation.

In his statement, Duran thanked The Times for its reporting on the case. The Times story in March focused on a 2005 settlement with a French insurance company that had been accused of cheating Armenians out of life insurance payouts.

The $17.5-million settlement with the Paris-based insurer was supposed to go to descendants of the genocide and to Armenian charities selected by a newly created French nonprofit. But The Times detailed troubling irregularities. The French nonprofit was never established; Christian churches said they never received the hundreds of thousands of dollars they were supposed to get; some of the money was sent to the pet charities of Geragos, Kabateck and others involved in the case, including their alma mater, Loyola Law School; and hundreds of thousands of dollars were directed to sham claimants.

Less than 8% of claims submitted by Armenians around the world were approved, despite what in many cases was overwhelming evidence that the applicants were rightful heirs.

Complaints to the state bar and other law enforcement agencies about Geragos, Kabateck and other lawyers began in 2010 and continued for about a decade. Over the years, the state bar filed disciplinary charges against three lesser-known attorneys, and eventually disciplined one, but it took no action against Geragos and Kabateck.

Closing a complaint against Kabateck in 2014, a state bar official informed one alleged victim, “suspicion is not a basis for investigation.” People who complained about Geragos told The Times that they were not provided with any explanation for the decision not to bring charges against him.

Representatives for Geragos and Kabateck have previously told The Times they did nothing wrong, that they were not responsible for approving or denying claims and that others, including those prosecuted by the bar, were to blame for the fraud in the case.

The Times reporting prompted politicians in Sacramento and Washington, D.C., in April to call for an investigation into the handling of settlement funds. Their interest triggered worry inside the state bar, which depends on Sacramento lawmakers to approve the annual fee bill that sets most of its budget, according to emails obtained through public records law.

“I am sure [an Assembly staff attorney] will want to know what we are doing/did do specifically re the allegations against Geragos and Kabatek (sic),” state bar Executive Director Leah Wilson wrote to the agency’s legislative director in April. “Am concerned it wasn’t/isn’t much!”

“Good call. I’m sure she won’t be the only one asking,” replied legislative director Donna Hershkowitz.

A subsequent legislative analysis for a bill that sets the annual fees paid by California attorneys noted the allegations and said of the state bar’s decision not to charge Geragos and Kabateck: “Some lawyers connected with the case, but not the most influential, were disciplined.” The fee bill for the state bar’s 2023 budget passed anyway in a vote this summer.

Though more than 15 years have passed since the settlement, there is no statute of limitation for investigations the state bar initiates itself.

Samuel Shnorhokian, a French business executive who was part of a court-appointed board for the settlement, was one of those who has long complained about the mishandling and misappropriation of funds due to both descendants and the Armenian community. He said he saw no difference between those attorneys previously accused of misconduct by the state bar and Geragos and Kabateck.

“I put them as the same level of personal responsibility,” Shnorhokian told The Times in a recent interview.

Though the state bar rarely publicizes investigations, the genocide probe is the second time it has done so this year.