Le­gal bat­tle over mas­sive emer­ald is ex­tended

Judge halts the re­lease of the Bahia stone at the re­quest of the U. S. Jus­tice Depart­ment.

Los Angeles Times - - LOS ANGELES - By Stephen Ceasar stephen. ceasar @ latimes. com Times staff writer Vic­to­ria Kim con­trib­uted to this re­port.

The more than six- year le­gal bat­tle over the Bahia Emer­ald seemed to have reached a con­clu­sion last month, when a Los An­ge­les Su­pe­rior Court judge fi­nally de­ter­mined the own­ers of the prized gem.

The 180,000- carat, 751.77pound be­he­moth, which has been held at a Los An­ge­les County Sher­iff ’s Depart­ment lockup for six years, was to be re­leased as early as this week to the win­ners of the con­tentious le­gal saga.

Not so fast, says the U. S. Depart­ment of Jus­tice.

On Thurs­day, a fed­eral judge or­dered that the stone re­main un­der lock and key, bar­ring any­one, in­clud­ing those who won their claim to the emer­ald, from mov­ing or even see­ing it.

The or­der, is­sued by U. S. Dis­trict Court Judge Colleen Kol­lar- Kotelly, granted a re­quest by the Depart­ment of Jus­tice for a re­strain­ing or­der to pro­tect the stone. The depart­ment ar­gued that the gem is sub­ject to for­fei­ture in Brazil, where pros­e­cu­tors in an up­com­ing crim­i­nal trial al­lege that two men know­ingly re­ceived the stolen emer­ald and il­le­gally smug­gled it out of the coun­try.

The re­quest, which cites a treaty be­tween Brazil and the United States, warned that the emer­ald, once val­ued at $ 372 mil­lion, could be sold or oth­er­wise lost with­out the court’s in­ter­ven­tion.

The gem, un­earthed in 2001 from a mine in the state of Bahia in eastern Brazil, is a mass of rock with tubes of pro­trud­ing green crys­tals. It is among the largest un­bro­ken stones of its kind.

Brazil’s Los An­ge­les­based lawyer, John Nado­lenco, said Brazil­ian of­fi­cials have been work­ing with the fed­eral gov­ern­ment to se­cure its re­turn.

“The Bahia Emer­ald was il­le­gally mined and un­law­fully ex­ported from Brazil,” he said. “This is an im­por­tant step to re­turn­ing the emer­ald to its right­ful home.”

In May, Los An­ge­les Su­pe­rior Court Judge Michael John­son granted own­er­ship of the emer­ald to a hold­ing com­pany owned by three busi­ness­men, who claimed the emer­ald be­came theirs when it was used as col­lat­eral in a $ 1.3- mil­lion deal for di­a­monds that fell through.

The com­pany — coowned by Idaho busi­ness­men Kit Mor­ri­son and Todd Armstrong, and Jerry Fer­rera of Florida — “has pre­sented ev­i­dence es­tab­lish­ing clear ti­tle to the Bahia Emer­ald as against all other own­er­ship claims,” John­son wrote in his de­ci­sion.

At­tor­ney An­drew Spiel­berger, who rep­re­sents Mor­ri­son, said that he and his clients have gone through 6 years of lit­i­ga­tion to suc­cess­fully prove that they are the right­ful own­ers.

“Now it looks like we’ll go through a bit more to ac­tu­ally ob­tain it,” he said.

Af­ter the gem’s dis­cov­ery in 2001, min­ers trans­ported it to Sao Paulo, where it be­gan an eight- year odyssey dur­ing which it re­peat­edly changed hands.

In 2005, the gem was shipped to a self- trained ge­ol­o­gist and min­ing en­tre­pre­neur in North­ern Cal­i­for­nia who knew the orig­i­nal min­ers. He said he shipped it to New Or­leans, where Hurri- cane Ka­t­rina sub­merged the stone for weeks near the French Quar­ter.

Af­ter f ish­ing it out, the man some­how lost pos­ses­sion of the gem, and it even- tu­ally ended up in the hands of Larry Biegler, an in­vestor from Par­adise, Calif.

In 2009, Biegler re­ported it miss­ing from a South El Monte vault. Los An­ge­les County sher­iff ’ s in­ves­ti­ga­tors tracked the emer­ald to a Las Ve­gas vault, where it was stored by Mor­ri­son and Armstrong.

Sher­iff ’s in­ves­ti­ga­tors could not sort out who owned the gem, so they con­fis­cated it — set­ting off years of lit­i­ga­tion, in which eight dif­fer­ent peo­ple at one time or another claimed own­er­ship. Ul­ti­mately, the group led by Mor­ri­son won.

Spiel­berger said that un­der Brazil­ian law, the coun­try has a right of for­fei­ture of an as­set like the emer­ald so long as there were no “good faith” pur­chases of the ar­ti­fact.

“My clients have been de­ter­mined to be good- faith pur­chasers of the Bahia Emer­ald,” he said. “My clients are the own­ers.”

THE BAHIA Emer­ald has been claimed by eight dif­fer­ent peo­ple at one time or another.

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