LOS ANGELES—The U.S. Department of Justice on July 8 announced it has reached a settlement to seize an 11-bedroom French chateau-style mansion in the Holmby Hills neighborhood worth $63 million that was tied to an Armenian political corruption scandal.

The mansion, formerly belonging to the family of Gagik Khachatryan, Armenia’s ex-minister of finance, will be forfeited to the United States government, which will sell the property to the highest bidder and retain 85 percent of the proceeds, according to the DOJ.

The remaining net proceeds of the sale will be delivered to Mr. Khachatryan’s sons and a corporation they own.

In 2011, a trust benefiting the ex-minister’s sons purchased the property with funds provided by an Armenian businessman. At the time, Mr. Khachatryan was the most senior official in charge of taxes and customs in the Republic of Armenia. The sons claimed that the funds were provided as loans by the businessman, while the United States alleged the loans, which were repeatedly extended without repayment, were covers for bribe payments, the DOJ said.

The payments are also the subject of pending criminal prosecutions in Armenia.

“We do not tolerate corruption in the United States and we will not allow foreign officials to use our country to facilitate their own corruption,” U.S. Attorney Martin Estrada said in a statement.

“Our recovery of these ill-gotten gains should send a message to corrupt officials throughout the world that they will find no safe harbor here.”