MANHATTAN (CN) - Federal prosecutors claim that Ralph Esmerian, a fourth-generation jeweler, dealer and collector, got $217 million in loans through fraud and embezzlement, including double-pledging jewelry dating back to Marie Antoinette and ancient Greece and Rome. In a 20-page affidavit, U.S. Postal Inspector Eleanor Berry accuses Esmerian of bankruptcy fraud, wire fraud and concealing assets.
"Beginning in at least 2005, Esmerian, a fourth-generation dealer and collector of valuable jewelry, artwork, and other objects, perpetrated a large-scale fraud in connection with at least approximately $217 million in loans that he obtained from financial institutions and other sources," according to the affidavit.
It accuses Esmerian of borrowing $177 million from Merrill Lynch Mortgage Capital, in 2005 or 2006, "for the purpose of, among other things, financing his business operations and buying Fred Leighton LLC, a high-end jewelry retailer, and related entities."
The affidavit continues: "Almost immediately after borrowing funds from Merrill Lynch, Esmerian began to sell collateral pledged to Merrill Lynch without notice to Merrill Lunch, and to double-pledge that collateral to obtain other loans, including a $40 million loan from Acorn Capital Group LLC."
And, it says, after Esmerian had Fred Leighton and related entities file for bankruptcy protection on April 15, 2008, he "repeatedly and systematically embezzled property belonging to Fred Leighton and other debtor entities, sold it, and converted the proceeds to his own use."
Esmerian is accused of concealing $40 million in company money, lying under oath about money he made on jewelry sales during bankruptcy, and transferring assets to Switzerland and elsewhere.
Six of the jewels that Esmerian allegedly embezzled and sold include the Duchess of Newcastle Diamond Brooch, a gilded album commissioned by Marie Antoinette, one lot of Greco-Roman gold jewelry, and a collection of antique Islamic rings and gems. Each of these items was valued at $1.5 million, the complaint states.
"In total, Esmerian stole or double-pledged at least approximately $40 million in property," according to the complaint.
Berry concludes her deposition by asking that Esmerian be "imprisoned or bailed, as the case may be."
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