US embassy cable - 04YEREVAN1746

C O N F I D E N T I A L YEREVAN 001746 
 
SIPDIS 
 
DEPT FOR EUR/CACEN, DS FOR CIL, IP/EUR 
 
E.O. 12958: DECL: 08/05/2014 
TAGS: PINS, ASEC, ECON, EFIN, AM 
SUBJECT: LOS ANGELES BANK FRAUD COMES HOME TO ARMENIA 
 
REF: ANDRES-OTTO 8/5/2004 TELCON AND FAX 
 
Classified By: CDA Anthony F. Godfrey for reasons 1.5 (b) and (d). 
 
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SUMMARY 
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1. (SBU) The U.S. Secret Service provided information on a 
large transfer of fraudulently obtained funds from a U.S. 
bank to bank accounts in Russia and Armenia.  We sought GOAM 
assistance in freezing the account in Armenia and recovering 
the money already disbursed.  Based on our intervention, 
Armenia's Central Bank froze the suspect account.  End 
Summary. 
 
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LOOTED TRUST FUND CASH ENDS UP IN YEREVAN 
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2. (SBU) Frankfurt's Secret Service liaison offices contacted 
Post after noon August 5 with urgent information about a 
fraudulent transfer of funds (USD 2.2 million) from a Bank of 
America (BofA) account in Los Angeles to accounts in Russia 
and Armenia, including roughly USD 1 million in Yerevan at 
the British HSBC bank.  The account holder, Ara Bostonjyan, 
has already withdrawn roughly USD 600,000. 
 
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BofA APPARENTLY FAILS TO PROPERLY REQUEST FREEZE 
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3. (SBU) HSBC Yerevan CEO Nick Gilmour told us that his bank 
had automatically notified the Central Bank of Armenia (CBA) 
of the large transfer of funds on Monday, August 2, as 
required by Armenian law.  He also noted that the Bank of 
America had contacted HSBC London to request the funds be 
frozen, at which time he had outlined the procedures 
necessary under Armenian law.  Gilmour noted that the Bank of 
America had not pursued the necessary legal channels, and 
simply had repeated their informal request the next day. 
(Note:  Armenian banks are required to make funds available 
for withdrawal within 24 hours to comply with a court order 
or if the CBA submits a written request for an injunction 
followed by a court order.  End Note.) 
 
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EMBASSY ACTION FREEZES SUSPECT ACCOUNT 
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4. (C) The Embassy and the National Security Service (NSS) 
are cooperating closely in this case.  Charge spoke 
personally with the Central Bank Chairman Vache Gabrielyan to 
request urgent CBA action to freeze this account pending a 
more formal request from appropriate USG agencies.  The 
Central Bank subsequently froze the account, preventing the 
withdrawal of USD 300,000. 
 
5. (C) While we succeeded in getting timely CBA support to 
freeze this account, this action is not permanent.  Unless we 
can provide appropriate documentation to the GOAM requesting 
a more permanent action, this step could be reversed.  The 
Armenian NSS has agreed to continue to surveil the account 
holder, but it would require significant effort and legal 
action before the disbursed funds could be recovered. 
GODFREY