“Significant Consequences” If New York Life Violated State Law

January 30, 2002

Washington, DC -- New York’s Office of State Comptroller (OSC) has agreed to the Armenian National Institute’s (ANI) official request to investigate New York Life Insurance Company’s records and to determine whether New York Life violated New York Abandoned Property Laws when it failed to turn over the unclaimed or abandoned life insurance policies of Armenian Genocide victims to the state. In a letter to ANI’s Legal Affairs Department, the OSC said that the investigation will “require a review of the records of the Company” and that it will keep ANI “apprised of any determination made.” New York Life is incorporated in New York State.

In extensive research since 1999, ANI uncovered several documents which discuss New York Life’s business operations relative to the sale of life insurance policies in Turkey. According to New York Life’s then General Counsel, the Company conducted life insurance business in the Ottoman Empire from the late 19th century, and by 1914, had at least 8,000 “outstanding contracts” of life insurance policies, “aggregating in the neighborhood of $10,281,134.” Writing to U.S. Secretary of State Robert Lansing, as early as 1922, New York Life’s then Vice-President indicated that the majority of the New York Life’s insurance policies in Turkey were held by Armenians. He said that Armenians were “prematurely terminated by such violent death” such as being “subjected to massacre and illegal killing and fatal exposure by or with the acquiescence of the Turkish authorities.”

Of the nearly two million Armenians who were uprooted from their historic homeland of 2,500 years and immediately deported between 1915 and 1923, the Ottoman Turks massacred 1.5 million, marking the first genocide of the 20th century.

As recently as April 12, 2001, a New York Times article reported that New York Life acknowledged it has at least 2,200 policies that are still “unresolved,” indicating that they are still unclaimed or abandoned. A New York Life spokesman stated that “no one came forward” to claim their policies, “and we couldn’t find any heirs.”

“New York Life knew or should have known as early as 1916 that the reason ‘no one came forward’ and the Company ‘couldn’t find any heirs,’ was because almost all Armenians in Turkey were—using New York Life’s then Vice-President’s words—‘prematurely terminated’ at the hands of the Turks,” said ANI Board of Governors Chairman Robert A. Kaloosdian, who initiated both ANI’s research and the request that the State of New York launch an investigation.

Writing to the U.S. State Department, New York Life’s then top executives, both the President and the Vice-President, confirmed the ominous remarks made by Talaat Pasha to Ambassador H. Morgenthau demanding a ‘complete list’ of New York Life’s Armenian policyholders. Ambassador Morgenthau later called Talaat’s demand “the most astonishing request” he had ever heard. In the words of their then Vice-President, T.A. Buckner, the “Turkish Government proposes…the confiscation of claims for insurance upon the lives of those Armenians…with a view to collecting itself the insurance upon the lives of its victims.” Yet more shocking was Talaat’s remark made to Ambassador Morgenthau that the Armenian policyholders “are practically all dead now and have left no heirs to collect the money. The Government is the beneficiary now.” In anticipation of a settlement treaty between the United States and Turkey, New York Life’s then Vice-President, requested that the Secretary of State, make provisions to recover losses New York Life sustained in the Ottoman Empire, declaring that “the Turkish Government is, and should be held, responsible” for the “premature termination” of their Armenian policyholders.

Kaloosdian said, “Given these facts, together with many other U.S. archival documents, including New York Life correspondence and reports, diplomatic records, and news articles, particularly those in the New York Times reporting on the Armenian Genocide, it is fair to say that New York Life knew or had reason to know that most if not all of its Armenian policyholders in Turkey were dead, thus, at least creating the presumption of abandonment.”

Under New York’s Abandoned Property Laws, unclaimed or unpaid life insurance funds shall be deemed abandoned property if unclaimed after a legislatively prescribed period of time, ranging from three to seven years. Once deemed abandoned, every April of each year, life insurance companies are required to make a verified written report to the state comptroller of all abandoned property and then to turn over the properties to the state comptroller.

Kaloosdian and ANI’s Director of Legal Affairs, Jacob Toumayan, who has been working on the issue since 1999, welcomed the New York State development.

They indicated that they expect it will positively impact the 1999 class action suit of Marootian v. New York Life Insurance Company filed in Los Angeles, California. Marootian and 11 other plaintiffs filed a $3 billion lawsuit individually and on behalf of all Armenians similarly situated against New York Life, seeking to be paid as heirs or beneficiaries of relatives who bought New York Life insurance policies in good faith.

“We have the best interest of the plaintiffs and the Armenian community in mind and we hope that New York Life will do the right thing and resolve the matter in a fair and equitable manner that is just to all parties involved, unlike the settlement offer the Company made earlier last spring,” Kaloosdian said.

Last April, New York Life offered to settle the Marootian class action suit, indicating it would pay beneficiaries ten times the face value of the policies and contribute $3 million to various Armenian civic organizations for a total figure somewhat in excess of $10 million. The preliminary settlement was rejected by the plaintiffs’ attorneys because they believed the offer did not represent a fair settlement to the beneficiaries nor did it do justice to the victims of the Armenian Genocide, since New York Life still did not recognize the tragic events of 1915 as genocide.

The Marootian case did not reveal a defense by New York Life that it turned over the unclaimed or abandoned insurance funds of the victims of the Armenian Genocide to New York State. The plaintiffs’ attorneys also indicated that at no point during the litigation did New York Life reveal such a defense.

“More than 86 years have passed and still New York Life has not made amends to the heirs and beneficiaries of their Armenian policyholders,” said Kaloosdian. “New York Life may have unjustly enriched itself by keeping these unclaimed life insurance funds, rightly or wrongly, and must make restitution. It had full knowledge of the tragic fate of their Armenian policyholders, and therefore, they may have had knowledge or appreciation of the benefits conferred to them.”

Toumayan said, “If the OSC determines that New York Life has violated the state’s Abandoned Property Laws, they may have to disgorge, for example, not only the face values of these policies but also, according to the Abandoned Property Laws, interest on such unpaid funds for the period held by the insurance companies at a rate of 10% per annum.”

“Moreover, under New York Abandoned Property Laws, New York Life is required to file an annual verified written report to the state comptroller of all the unclaimed life insurance funds held. If the Company failed to account for these funds to New York State, it may also be subject to penalties of not less than $100 for each day such report or affidavit shall be willfully delayed or withheld,” he added. “It is interesting that when the New York legislature passed a bill to bring abandoned life insurance policies under the abandoned property statute, it was New York Life that contested the legislation, seeking a judgment to declare the law unconstitutional.”

“Since all this occurred over 86 years ago, if New York State forces New York Life to disgorge a sum including interest and penalties, the consequences could be significant,” Kaloosdian said.