Defrauded
I was forwarded this letter to the California Courier by K. George Najarian and Carolann S. Najarian. It’s their story of an investment in Armenia gone wrong. Helping, befriending, and trusting a man they met while doing humanitarian aid, they decided to invest in Armenia. Tricked out of their money, they decided to fight, but despite overwhelming evidence, they got nowhere. It’s a sad indictment of law in Armenia. Until I find a proper link, I am posting the full letter below.
Neither Courts nor Officials Care
That We Were Defrauded in Armenia
By K. George Najarian and
Carolann S. Najarian, M.D.
We would like to relate a sad, but true account of what we have experienced
within Armenia’s legal system over this past year.
Let us first introduce ourselves: our humanitarian efforts in Armenia and Artsakh have spanned nearly 16 years. Our projects began after the earthquake and during the Artsakh liberation war and continue through today, with more than 50 trips to Armenia, the delivery of millions of dollars of medical supplies to both regions; the establishment of the Primary Care Center in Gyumri (1994) and the Arpen Center for Expectant Mothers in Artsakh (1995); hospital renovations; and many other efforts, including the rebuilding of Tsitsernavank, the 4th c. basilica in Kashatagh (Lachine corridor), assistance to villagers, invalids, veterans, orphans, and schools. Our work has been carried out through the Armenian Health Alliance, Inc. and its supporters as well as through our own private funds.
In response to the Armenian government’s pleas to the Diaspora to invest in Armenia, George undertook a project with a young man whom he met after the earthquake and with whom he subsequently became a friend. (We even brought him to Boston to have surgical correction of his infertility for which we paid; he now has two children, thanks to us!)
In 1996, after a year of prodding George to finance a business venture, they opened a photo shop as partners - he did the work and George paid for everything. He also introduced George to various people with other business
propositions. One introduction led to our purchase of two parcels of land in the Ethnographic Center at Tzorakugh with spectacular views of Ararat. Throughout this time this ‘friend’ presented himself to us as an honest person, thankful for the assistance we had given to him and wanting to help George in whatever way he could.
This ‘friend’ was George’s representative, not partner, in the development of these two parcels of land. Thus, he had Power of Attorney to represent George in his absence. However, he used this Power of Attorney to
fraudulently privatize in his name these lands and our two newly constructed buildings, in effect expropriating our substantial investment. When we understood what he had done, with the hope of avoiding a legal battle, we tried to negotiate with him for the return of the properties. This failed, despite offers of significant sums of money.
Without any other recourse open to us and based on the advice of legal experts in Armenia, we filed a criminal case against him, first with the Yerevan City Prosecutor’s Office (September, 2003) and later with the Prosecutor General of Armenia’s office (March, 2004).
We had assumed the facts in the case were obvious — “open and shut” — given the evidence of scores of witnesses, bank documents, receipts, etc.
We had not anticipated that our ‘friend’ would enlist the help of well-connected persons in the government who could influence the case
through bribes and whatever other means available to them, including intimidating witnesses and threatening lives. In December, 2003, after a long but superficial investigation, the Yerevan City Prosecutor’s Office dismissed the case and referred us to civil court. (We suspected the prosecutor had been bribed but could not prove it.) On appeal, the case was reopened at the Prosecutor General level. This time prosecutors agreed we were the victims of fraud. They also found that the ‘friend’ was guilty of tax evasion. Attempts were again made to hijack the case through dismissal at this point but failed. While the Yerevan City Prosecutor who previously dismissed the case admitted during a meeting at the General Prosecutor’s Office, in George’s presence, that he made a mistake by dismissing the case, the current prosecutors said that the evidence was too powerful to dismiss, and sent the case to the next phase within the criminal process —
that of acquiring evidence for the trial.
Two investigators were assigned the task of preparing the evidence for trial: witnesses were repeatedly called and subjected to hours of
interrogation; George returned to Armenia again to testify - this time for more than 40 hours; and, documents were requested and provided by us for a third time. Again, the investigation dragged on for months and despite mountains of evidence supporting our claims, and little on the other side supporting his claim of ownership, the two investigators doing the work dismissed the case! Their decision, a shabby, crude, and even absurd document completely ignored or marginalized important evidence supporting our claims and falsified facts –openly. We were again referred to civil court. We had information that these investigators were following orders from persons within the government who stand to benefit from expropriating these properties from us.
Prominent legal minds in Armenia, including experts within the government, have advised us that this is a criminal case of fraud punishable under Armenian law. Similar cases, with less evidence, have been fully prosecuted by the Prosecutor General’s Office. The attempt to move us into civil court is an attempt to kill the case completely. Under Armenian law, we have no civil case because there is no partnership agreement between the parties - we were not partners with this ‘friend.’
It pains us to tell you we did not find an objective, fair justice system in Armenia, but instead we have seen the inside of a system wrought with deceit and corruption that crushes even their own when they try to resist. During this past year, in addition to our direct appeals, others, including a high ranking member of the Armenian government, have appealed repeatedly for a fair and objective hearing of our case to persons within the judicial system and to President Kocharian himself.
The US Embassy is fully aware of the circumstances of our case as are a number of US congressmen who have written to the Armenian ambassador in Washington expressing concern over the conduct of our case - judicial processes must be open and fair otherwise investors will be leery of undertaking investment risk in Armenia.
It is impossible to recount all that we have been through this past year. It has been an emotional roller coaster as we faced the fact that persons within this government would participate in this humiliating and base fraud against us. It appears due process of law and the protection of rights and investments are still fragile concepts for the government of Armenia. As we understand other Diasporans have encountered similar problems and have been treated in this same manner. We hope with our case being made public there will be a willingness to discuss these critical issues, and the Armenian government will take the necessary steps to clean up corruption: the judiciary should not exist to guarantee people in power wealth. It is no way to build a country!
Writing about our ordeal is a very painful step taken reluctantly after one year of struggling to get a fair hearing of our case. Although we are still in the appeal process, we understand that our property - including the place where we anticipated living out our retirement years - has been taken from us. What you are not seeing, though, are the tears we have shed over knowing that we may never be able to return to Armenia, to live and continue our work, and knowing not only has our property been expropriated, but we as people who have loved and worked for the good of Armenia and its people have been so dishonestly treated.
The pain goes very deep.
What kind of a crook is that guy… I’m shocked by hearing this story… How can you betray such a good people who have helped you to have children… This is just very wrong and I think that person needs to be judged by “unwritten” laws of Armenia, unless some one can come up with a better method.
Comment by Hakob Gevorgian — 11/30/2004 @ 5:52 pm
Unfortunately, the “unwritten” laws of Armenia seem to be supporting him…
Comment by Onnik Krikorian — 12/1/2004 @ 1:16 am
Onik, I was being sarcastic about the “unwritten laws”. I hope that this matter will take some action that will support constitutional amendments. We really need to treat nicely our felow armenians who want to support our country.
Comment by Hakob Gevorgian — 12/1/2004 @ 7:58 am
And not just our fellow Armenians! There should be proper rule of law to protect anyone who wants to invest in Armenia. Without it, investment will be limited to companies large enough to have government influence and high-risk takers.
Comment by Matt — 12/1/2004 @ 9:52 am
Well, I feel sad about the story, as Najarians will leave Armenia. Nevertheless, as a lawyer, I must say that they shot themselves in the foot. First, they should have chosen their trust more carefully - the person who defrauded them had their power-of-attorney. Second, that is clearly a civil case; instead of going to Prosecutor General (which handles criminal matters) and writing to the President, they could have hired a good lawyer and filed a case with the local court. When a business partner defrauds you in New York City, you take him/her to court - you don’t go to the DA office or write to Governor Pataki to complain.
Moral of the story: 1) place your confidence sparingly; 2) know your rights and proper venues for enforcing them.
Comment by George — 12/1/2004 @ 2:34 pm
I think George makes a good point here and it says a lot about the nature of Armenia and how things are done. Virtually everything is decided NOT according to the law but rather by who you know in Government, and the higher the position the better.
It also reminds me about something once said to me a few years ago by a Diasporan doing humanitarian aid work here (although based in New York he would travel here frequently) when we touched upon the matter of investments.
That is, most — if not all — of the big Diasporan (and I daresay non-Diasporan but especially Diasporan) investors work through either the President’s Office (in the form of the President himself) or the MFA (in the form of Oskanian and / or Salpi Ghazarian). This really isn’t the way things should be done and says a lot about the investment climate.
Comment by Onnik Krikorian — 12/2/2004 @ 2:14 am
Well, I think if Najarian has a chance to win this case. There could be a strong evidence in this case based on the following:
“In 1996, after a year of prodding George to finance a business venture, they opened a photo shop as partners - he did the work and [George paid for everything]. He also introduced George to various people with other business
propositions. One introduction led to our purchase of two parcels of land in the Ethnographic Center at Tzorakugh with spectacular views of Ararat. Throughout this time this ‘friend’ presented himself to us as an honest person, thankful for the assistance we had given to him and wanting to help George in whatever way he could.”
If Najarian shows his bank statements, then he may use it as evidence that he basically have paid everything for the business.
Anyway, I’m not an attorney, thus this is just my opinion…
Comment by Hakob Gevorgian — 12/2/2004 @ 11:01 am
Onnik’s point says as much about the investment climate as about the nature of the investors. It is true that many of the big Diasporan investors work through the office of the President or the Foreign Minister, but they don’t HAVE TO. They do it as a matter of choice. Familiarity breeds contempt, contempt breeds dissatisfaction and angry letters like “I have invested a million dollars and all I got is this lousy t-shirt.”
It’s the same with petty corruption. Should you take the high road of standing up for your rights? Or pay 1000 dram to the traffic cop/land title guy/electricity man? Are the people who pay a bribe as complicit as those who take it?
Comment by George — 12/2/2004 @ 11:04 am
I have had a plan of my own to invest money and build a hotel ( http://www.zangezur.com ) in Tatev. I recently stopped this, before I had invested any real money.
I had basically gone through the same issues that the Nazarians had. I am not a Diasporan, just a guy who came to Armenia and found what I saw as an opportunity.
I decided against giving someone the power of attorney, but was tempted to (I don’t live in Armenia now).
I asked many times about whether one needed connections in the government. The advice given to me was that within an hour of Yerevan, yes, but down in Syunik no. I don’t know how true that holds.
The reason I stopped was not perceived corruption or the rule of law, I knew that risk when I started my plans, but ultimately that costs went up and up, and it became too expensive.
Comment by Matt — 12/2/2004 @ 9:57 pm
George,
I agree totally. It takes two to tango. However, I’d say that these investors see the President and Foreign Minister’s offices as necessary to guarantee the safety of their investments. In that sense, they do have to go through these channels but they shouldn’t have to.
The reality, however, is that you need the backing of those high up, especially if you think you might ever end up in court. At the same time, you also have to keep these people sweet or else, what they giveth, they can also taketh away.
Comment by Onnik Krikorian — 12/3/2004 @ 3:03 am
Do these bueinssmen ever think of the geographical location of the Armenia? I mean, c’mon, I don’t want to scare people around here, but we’re in a tough political era, why do these people want to invest in Armenia *RIGHT NOW* anyway? There is something fishy going on in Armenia…
and Onik, since you live in Armenia, could you tell us what is the opinion of small business owners outside of the Yerevan. For instance, about the marketing, about supply they need?
Thanks
Comment by Hakob Gevorgian — 12/3/2004 @ 12:49 pm
People do invest in Armenia because despite the risks, there’s an enormous profit margin to be reaped. If you hedge your risks properly (in a variety of ways), you can make a lot of money in Armenia. The growth of tourism/restaurant, food processing, and other industries is one example. The presence of foreign investors, e.g. James Tufenkian is another. But the high risks disproportionally work against small- and medium-scale domestic and foreign investors (like Matt with the Zangezur project above) who can really get the economy going.
Comment by George — 12/3/2004 @ 11:42 pm
Hakob, not sure what your question is. Please rephrase.
George, points taken and indeed, hats off to people like Tufenkian. However, there are two interesting points or I guess, actually my assessment of why investors like him are different.
i) He has a more mature, long-term and marketable idea of tourism to Armenia so in a sense, he’s not competing with the current phase of overly-expensive (for Armenia) hotels in the center that are more about short-term profits for those with the money to spend $70-120 a night in a country where you can rent an apartment downtown for $300 a month.
ii) Because of the former, he’s chosen locations that don’t step on anybody’s toes. Nobody, for example, will be wanting to build a hotel in Tsapatagh (a formerly Azeri village now inhabited mainly by refugees). The same with Nork and wherever that place is in Lori. However, as locations, I think they have an appeal even thought they are not smack in the middle of “the action.”
Anyway, whatever the successes in terms of attracting investment, it is still quite pitiful although I do acknowledge that it isn’t just corruption and the rule of law that are determinign factors. There’s also the issue of the blockade which makes it difficult to export products although the situation via Georgia is reportedly better now.
Hence why construction, diamonds, IT and tourism are the main success stories in economic terms.
Cheers,
Comment by Onnik Krikorian — 12/4/2004 @ 1:11 am
Hi, I’ve met Najarian’s once on a formal occasion in Armenia. They are such devoted and kind-hearted people. It breaks my heart that people like them have to cross paths with and suffer from criminals. Najarians have been so generous to Armenia and the Artsakh cause… The government of Armenia should be ashamed, especially David Harutunian!
Comment by Awful — 12/4/2004 @ 7:20 am
I do not know for sure, if the fellow Najarian is related to Mary and Varges Najarian. I assume they are. Najarians are honorable, passionate devoted patriots for Armenia and Armenians. What a shame to treat to anyone like that specially to Najarians. I love them dearly and I hope they wil find a peace and comfort with a just resolution.
Comment by suzan — 12/5/2004 @ 4:35 pm
Whenever I read about Armenians doing wrong to other Armenians I break apart. The sad events surrounding Najarians’ case should bring shame and dismay to all Armenians.
When will the people of our nation learn that no other country in the world cares about the well being of our nation, our past and present sufferings or our future? Only Armenians can help Armenians, regardless of which country they are from. If the authorities in Armenia do not institute the much-needed judicial, political and economic reforms and make these reforms the corner stones of lawful and orderly society the future for Armenia will be bleak. A country based on corrupt governmental elements and system, surrounded by overwhelmingly powerful historic enemies is doomed for destruction.
This is the period when Armenia should rise to the occasion and set an example to its neighbors so that it maybe noticed by the European countries and the world. I hope that the Armenian political establishment will not lose the sight of this golden opportunity of evolution to a fully democratic, progressive, just and open society. In order to survive, Armenia needs to be part of the European Union. And, in order to achieve this goal Armenia must function as a European country.
Comment by Ari Safarian — 12/5/2004 @ 11:26 pm
Ari Safarian,
I don’t want to turn this into a discussion forum, but I’d like you tell you that ever since Tigran II Armenians were always divided. And I see no success in uniting this nation that will end it’s being very soon.
Europe and its “democratic” rules will erase Armenian nation. Of course many of you will disagree with me, but this is my own opinion and I will never stand back of this. So if you disagree with me you can contact me at \blogs at gevorgian dot com\.
Comment by Hakob Gevorgian — 12/6/2004 @ 2:14 pm
Hakob,
A pity. Discussion is good and it is an interesting topic — Armenians as a united or divided nation (on the one hand, inside the Republic and on the other, outside and then as a collective mass although I suppose another question then arises — is any nation united…)
Secondly, Europe and its “democratic” credentials versus the authoritarian and comparably inflexible Russian model that seems to be setting the agenda in Ukraine at the moment. And of course, as one Georgian analyst recently wondered, is this democraticization or merely continued globalization and “modernization.”
Moreover, do the still traditional societies of the S. Caucasus need to modernize to some extent to combat such phenomena as corruption and falsified elections which are as much an issue of culture, history and mentality as anything else.
Neither is “perfect,” of course, but ultimately, which one best suits the development of countries such as Armenia and who should get to choose anyway? Outside powers, the leadership in a particular country, the people, or all three?
Probably, I would argue that this is what happened in Georgia and is now happening in Ukraine although complicated quite alarmingly by the geographic division of the country into pro and anti-Russians.
I suppose you can argue that the direction Armenia is taken is also being decided by outside powers anyway. If not Europe, it is the World Bank and Russia that seems to be deciding most issues and it is the Armenian Government rather than the people who are pushign for European integration.
Matt, will you be setting up a discussion section for this site where rather than comment we can instead discuss themes raised by your blogs and postings of Armenian-related articles?
Cheers,
Comment by Onnik Krikorian — 12/7/2004 @ 1:19 am
What I tell anyone wanting to invest in Armenia is to treat it like ANY OTHER INVESTMENT, especially liking the Mexico analogy. Behave like you are investing in Mexico, and you will at least avoid this sort of problem… if someone keeps urging you to invest and it seems obvious they would be managing it, be very suspicious. When giving power-of-attorney, only give them the powers they need to operate a business. NOT the power to sell/transfer the title for goodness sakes!! I dunno. It is just such a shame. He clearly defrauded them though (since I believe them) and needs to be forced by the legal system to compensate them.
Comment by Raffi Kojian — 12/8/2004 @ 1:41 pm
Well, Mexico is a little less corrupt than Armenia by Transparency International’s Corruption Perceptions Index (CPI) — 3.6 vs 3.1. Probably not a lot in it (who knows what .5 means in terms of how corruption manifests itself) and for sure, in a country as corrupt as Armenia, it really doesn’t seem like a good idea to trust significant sums of money to anyone. I suppose the argument is that this guy was a “friend” but I don’t think many businessmen in the West would pass over large sums of money and the rights to do whatever and that’s even with a legal system that generally works. As you say, it’s a shame but hopefully a wake-up call to the Diaspora to address the problem of corruption in Armenia and in especially with regards to the independence (or political dependency, in fact) of the Prosecutor’s Office and the Judiciary.
Comment by Onnik Krikorian — 12/9/2004 @ 4:53 am
I called my relative in Armenia about 2 days ago and asked him how is the living in Armenia. He is working (I believe for a Taxi Cab service) and he complains that his boss does not pay on time…
Anyway, I’m very disappointed from Armenians living in Armenia and abroad. I wish there was a better system that could make Armenians to respect each other (a little bit at least!)…
Onik, I like discussion, but not in blog[rel] (posting comments) =]
Comment by Hakob Gevorgian — 12/9/2004 @ 12:27 pm
The Najarians’ story is very sad and painful. I can imagine that they do not want to hear about Armenia — the little piece of land that has survived ages of invasions and other difficulties, the dreamed motherland that recently became independent and accessible. The Najarian’s and many other fellows from the Diaspora loved and supported the “little baby,” the newly-born ages-old Armenia. But, many have been disappointed and turned away from it…
I was born in Armenia and I have decided to stay here, even though I had many opportunities to leave for a better carrier and more comfortable life. I still cherish a hope that we can make Armenia a decent place to live. But, unless we coordinate our efforts to change anything here, Armenia will always be ruled by shortsighted and greedy boors. No, sorry, not always. If we do not act now, we will loose Armenia forever very soon — something that could not be achieved by barbarian tribes and external enemies…
My advice is as follows:
1. If the Diaspora wants to have a voice and any political influence in Armenia, it should have strong economic presence in Armenia.
2. Be serious about your investment and you will minimize the chances of being defrauded. Neither would you need to take legal action against your “friends.” As we say in Armenian: “Keep your door shut, not to call your neighbor a thief.”
3. Try to get qualified legal advice when starting a business in Armenia. Armenia has its own laws and regulations, which differ from the laws and regulations of other countries. Many Armenians from the Diaspora speak Armenian and they genuinely feel themselves home when they come to Armenia without realizing that they should know how to do business in this country and that they should not trust the first stranger, or even a relative or a friend of a friend.
4. Do not try to evade from taxes. If you try to do so, you will have to engage in unofficial transactions, which are hard to control. Most likely you will be defrauded and at the end of the day you will loose more than what you could gain. Moreover, you would probably have to pay some bribes to the tax authorities, so they would close their eyes on what you are doing. No need to mention, such bribery will only foster the corruption.
I agree with Raffi. Run business in Armenia in the way you would reasonably run it in any other foreign country. Some of you would prefer to stay away from Armenia to avoid any troubles. Well, if you want to see some changes here and save Armenia, you have to make your input, but in a wise and intelligent way.
Comment by vh — 12/10/2004 @ 7:56 pm