Former Fred Leighton Owner Sentenced to Six Years for Fraud

Ralph Esmerian, former owner and chairman of luxury jewelry
retailer Fred Leighton Holdings, was sentenced to six years in prison for wire
fraud, bankruptcy fraud, and concealment of assets on July 22, according to a
statement from the U.S. Attorney for the Southern District of New York.

Esmerian was sentenced in connection with a scheme to
embezzle and double-pledge collateral estimated worth tens of millions of
. The collateral partially secured over $210 million in loans Esmerian
used to finance his business operations and to purchase Fred Leighton.

Esmerian bought Fred Leighton in 2006
and obtained $217 million in loans from Merrill Lynch. Esmerian
secretly sold two of the most valuable items of Merrill Lynch’s collateral and
had the proceeds wired into his personal bank account on two separate occasions
in 2008, according to the U.S. Attorney’s statement.

The company filed
for bankruptcy in 2008
. According to the statement, Esmerian
repeatedly lied to the Bankruptcy Court and his creditors in sworn deposition
testimony, sworn affidavits, and other documents concerning his embezzlement of
debtor property, his double-pledging of collateral, and the location of
millions of dollars’ worth of assets of the bankruptcy estate.

Jewelry manufacturer Kwiat purchased
Fred Leighton in 2009

“Ralph Esmerian tried to game the financial system and the
bankruptcy process for years to finance his businesses. As a result of his
frauds, the lenders who trusted him have lost tens of millions of dollars. Now
Esmerian will pay a steep prices for his crimes,” Preet Bharara, Manhattan U.S.
Attorney, said in a statement.