Former Fresno Pension Administrator Pleads Guilty To Embezzlement

Archived News Release — Caution: Information may be out of date.

San Francisco - Charles V. Mugrdechian, Jr., pled guilty January 25, 1999, in U.S. District Court for the Eastern District of California, Fresno, to three counts of embezzlement from the Mid-Valley Employers Trust Group Insurance Trust (also known as Key Advantage Trust), a trust that was set up to provide medical insurance to the employee welfare benefit plans of small employers, the U.S. Department of Labor reported today.

According to Bette Briggs, acting regional director for the Labor Department’s Pension and Welfare Benefits Administration (PWBA) here, Mugrdechian, operator of Ararat International Administrators, which contracted to provide certain services to the plans, became a trustee of the trust and selected insurers who failed to pay the medical claims. The assets of the trust were subject to Title I of the Employee Retirement Income Security Act of 1974.

On July 10, 1997, Mugrdechian, along with his wife, Ardemis A. Mugrdechian, had been indicted for nine counts of conspiracy, embezzlement, money laundering and wire fraud in connection with their handling of the trust funds. Ararat ceased to operate as an administrator in Fresno in 1995. Though the amount of unpaid medical claims is disputed, the Labor Department alleges that unpaid claims from 1989 could total $5 million.

In the January 25 plea agreement, Mugrdechian, who now lives in Los Angeles, agreed to plead guilty to three counts of embezzlement of funds totaling $77,000, which occurred in 1992 and 1993. The $77,000 was used for personal investments and legal fees unrelated to the trust. Mugrdechian also agreed to make restitution to all victims in this matter.

Sentencing is scheduled for October 18, 1999, to determine the actual sentence and the amount of restitution Mugrdechian must make. Mugrdechian faces a sentence as high as five years imprisonment, the restitution, and a $250,000 fine. The Government wants Mugrdechian to make restitution for all unpaid claims, Briggs said.

Pursuant to the plea agreement, the Government has agreed to dismiss charges against Ardemis Mugrdechian. Charles Mugrdechian must cooperate fully with and assist the Government, and has agreed to be banned, for life, from acting, in any capacity, in any role associated with employee welfare benefit plans and pension plans, or their administration.

The case was prosecuted by Assistant U. S. Attorney Mark E. Cullers. The guilty pleas followed an investigation by the San Francisco Regional Office of PWBA with assistance from the Internal Revenue Service and the California Department of Insurance. PWBA’s investigation is pursuant to a national enforcement initiative to prevent such diversions of plan assets.

Note to editors: (U.S. v. Charles V. Mugrdechian, Jr., CR. F. 97-5173 OWW)

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