Law: The Twists and Turns of the Case of the Bahia Emerald

Judge Kronstadt’s Tentative and Proposed Statement of Decision in the case of the Bahia Emerald provides provides a fascinating insight into the twists and turns of the high profile case currently before a Los Angeles court.

Several years ago, the world’s largest emerald went missing, allegedly en route from Brazil to the USA following its purchase by Anthony Thomas for $60,000. Although a wire transfer of that amount was proved to have taken place, no evidence of Mr Thomas’ purchase of the emerald has come to light – a matter which Mr Thomas blames on a suspicious house fire and a group of conspirators who defrauded him.

The Court viewed Mr Thomas and several other witness as lacking credibility, especially given the confusing purpose of the purchase of a series of emeralds from Brazil. Precious gems were allegedly purchased as collateral for a loan to prop up an ailing technology company, Digital Reflection, Inc (DRI).

A consultant used to advise on the gems instructed Ms Mackell, an assistant with a background in graphic design, to structure the loan arrangement. She insisted that this plan was credible and that she stood to gain a $1 million success fee, though the Court viewed the financial arrangements thus:

“a financial plan that, as explained above, can most charitably be seen as puzzling, and less charitably as a means to find a naive investor.”

The Bahia Emerald was mined at a facility in Brazil owned by the family of Elson Robeiro, who testified through a translator in a videoed recording. He said that he never sold the Bahia Emerald to Anthony Thomas. Another Brazilian, Mr Ruy Saraiva Filho, testified that, given his experience in the mining industry, he knew that the Bahia Emerald was worth millions of dollars and did not offer to sell it for $60,000.

It was agreed by Mr Filho that Mr Thomas had covered a modest portion of the Brazilians’ costs incurred whilst gathering cut and polished emeralds intended for use as collateral for the DRI loan, though the full expenses of $3.75 million were never paid.

A central point of the case was an alleged verbal contract for the Emerald conducted at a carport in Brazil and the alleged signing of a Bill of Sale in an hotel bar. This was denied by Mr Filho, who also said that Ms Mackell appeared to be a social companion of Mr Catlett, rather than his assistant in matters relating to the emeralds. Varying testimony about the weights and measures used on the supposed Bill of Sale also undermined the statement of its existence.

The business practices of those involved in the emerald scheme were severely criticised by the judge:

“Catlett’s testimony about the appraisals for the Emerald also did not allay the Court’s concerns about their reliability and the independence of the appraiser. The amount of the appraisal in Exhibit 3 is $920 Million; the appraisal in Exhibit 52 from five months later is $372 Million. Yet, the two appraisals contain very similar language. The evidence that the appraiser was seeking a fee in the form of an interest in the underlying transaction, and that the transaction was part of the Program, caused the Court to remain skeptical about the genuineness of the planned transactions.”

Several of the witnesses were criticised by the Court for their lack of sophistication in financial matters.

A personal trainer and assistant to Mr Beigler, Marco Infante, testified that in 2005 he was asked to move the Bahia Emerald to a beansprout warehouse and later to the home of Mr Beigler. He was previously a good friend of Mr Thomas’ but said that they had become estranged. Mr Thomas had alleged that Mr Infante had been directed to look for the Bahia Emerald following its disappearance, a claim that Mr Infante denies.

William Manak, an engineer with a masters degree in business administration, was praised as “an intelligent, thoughtful person who was telling the truth. Compared to those with whom he worked at DRI, he was by far the most credible witness to the Court… Indeed, he may have been the most credible witness of all who testified live at the trial”.

Manak explained that the scheme to use emeralds as collateral to raise a loan was unworkable and that he had said as much to his colleagues. He also described Mr Thomas as a boastful man.

In analysis, the Court found that the Thomas parties had not achieved the burden of proof that they had entered into an agreement for the purchase of the Bahia Emerald, that the $60,000 wire transfer had been in payment for the Bahia Emerald, or that the lack of documentation was the responsibility of a malign parties intent on destroying Mr Thomas’ proof of ownership.

Download the full Tentative and Proposed Statement of Decision here: thomas-ruling-april-2011

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