Lazare Kaplan: Banks Stole $135 Mln, Bankers Received Bribes

(IDEX Online News) – Lazare Kaplan International is suing KBC and the Antwerp Diamond Bank for allegedly stealing $135 million, claiming that the banks cooperated with diamond trader Erez Daleyot. LKI, which is seeking $500 million in damages, further claims that bank executives were bribed.

New York City based LKI alleges in a lawsuit filed in federal court that the banks stole $135 million, funneling the proceeds through numerous shell companies across Europe, the Middle East and Asia, the Financial Times reported on Friday.

LKI and Daleyot's DD Manufacturing, both DTC Sightholders, cooperated in the past. DD Manufacturing managed LKI's NamGem polishing plant in Namibia.

According to the report, from 2008 through 2010, the banks together with Daleyot allegedly worked together to “transfer the diamonds through a series of legitimate and sham transactions that made them difficult to trace” and used the proceeds to pay off loans the banks extended to Daleyot, according to the complaint.

Daleyot was a large creditor of the bank and borrowed money to purchase fine art, real estate, airplanes and a yacht, the lawsuit alleges.

LKI further alleges senior KBC and ADB bankers received $20 million in bribes from Daleyot-controlled accounts to assist with the money-laundering scheme.

In the past few years, LKI stated in its public filings that it s has been in a legal and commercial battle to resolve what it described as it inability “to resolve a material uncertainty concerning (a) the collectability and recovery of certain assets, and (b) the Company's potential obligations under certain lines of credit and a guaranty.” This led to repeated delays in its financial filings.

LKI alleges the theft by KBC Bank and its subsidiary ADB caused “catastrophic damage to its business and property (…) in concert with a complex web of individuals and entities controlled by or associated with defendant customer, Erez Daleyot.”

The company is seeking $500 million in lost proceeds and damages on allegations of racketeering and money laundering, according to the FT repot.

In July, LKI reached a settlement with U.S. and UK underwriters and was paid $60 million for a filed claim. While that ended its legal battle with the insurance companies, LKI stated at the time that it "retains all of its rights to pursue recovery of its assets against third parties."