Most Recent Articles In Legal
Latest Legal Articles
- Dov Charney, Workers Rally Outside American Apparel HQ
- Department of Labor Fines BabyVision for Denying Overtime
- Catherine Malandrino Lawsuit Seeks $26.9M in Damages
More Articles By
Ralph Esmerian, the longtime jeweler to the stars and one-time chairman of luxury jeweler Fred Leighton, on Friday was sentenced to six years in federal prison for fraud involving over $210 million in loans and the retailer’s subsequent bankruptcy.
Upon completion of his sentence, Esmerian, 71, will face three years of supervision, during which he will be required to perform 600 hours of community service a year. His sentencing before Judge Denise Cote in Manhattan federal court also calls for the forfeiture of $20 million. His age and charitable contributions of around $20 million were cited by Cote as factors limiting his sentence.
“My actions were wrong and unjustifiable,” he told the court in a hushed voice. “Words cannot convey how remorseful I am.” Later in his remarks, he described his current life as a “private hell.”
Dressed in a heather gray suit, light blue shirt and navy tie that matched his attorney’s ensemble, Esmerian exited the court with a grin on his face and was overheard telling a colleague that he would probably be out of prison in “four [years] with good behavior.”
He was ordered to surrender to authorities at 2 p.m. on Sept. 9. Although the site of his incarceration hasn’t been determined, he requested that he serve his time in the federal correctional institute in Otisville, N.Y., a medium-security facility about 70 miles northwest of New York City.
In April, the fourth-generation jeweler, known for accessorizing Hollywood A-list celebrities such as Nicole Kidman, pleaded guilty to three counts — wire fraud, bankruptcy fraud and concealment of assets belonging to the estate of a debtor. He was arrested on Nov. 22 and led from his girlfriend’s apartment in Manhattan’s Tudor City section in handcuffs.
Preet Bharara, the U.S. attorney for New York’s southern district, said the jeweler embezzled and double-pledged $48 million in jewelry and other assets that were used as collateral for loans for his 2006 acquisition of Fred Leighton. He borrowed at least $217 million from Merrill Lynch, Acorn Capital Group and others to make the purchase from the retailer’s founder and sought to expand the nameplate to markets including Beverly Hills.
When the economy descended into recession and he fell behind on his payments in 2008, Merrill Lynch sought to sell off some of the jewelry Esmerian had pledged as collateral. He subsequently put Fred Leighton into bankruptcy to prevent an auction at Christie’s from taking place.
According to Bharara’s office, many of the pieces posted as collateral weren’t owned by Esmerian and he continued to sell off collateral without informing Merrill Lynch. Other pieces were double-pledged to secure additional loans.
Among those reacting to the sentencing was Greg Kwiat, chief executive officer of Fred Leighton.
“It’s a sad conclusion to a storied career in jewelry,” he said. “Since Kwiat purchased Fred Leighton in November of 2009, Mr. Esmerian has not been involved in any way. Today Fred Leighton is as strong as ever and as always remains committed to curating the finest collection of vintage jewelry.”