‘Jacob the Jeweler’ indicted for drug and money laundering

Fashion jewelry icon Jacob Arabo, founder of Jacob & Co., was one of 16 persons charged with violating various federal drug laws which include conspiracy to distribute in excess of 476 kilograms of cocaine and laundering in excess of $270 million in U.S. currency, federal prosecutors in Detroit announced Thursday in a statement.

Arabo also known as “Jacob the Jeweler” whose real name is Jacob Arabov, 41, is a high end retailer and jewelry designer who is famous for his diamond jewelry and oversized diamond watches, as well as for his celebrity clientele, which includes David Beckham, Madonna, Sir Elton John, Naomi Campbell, and Sean Combs. The company’s flagship store is located on 48 E. 57th St., New York.

The second superseding indictment, which was returned on May 10, and unsealed Thursday, is part of a previous indictment returned last year that alleges that Terry Flenory, Demetrius Flenory and twenty-three others operated a drug organization, at some point named the “Black Mafia Family” (BMF), which dealt in multi-kilo quantities of cocaine in the Detroit metropolitan area beginning in the early 1990’s, said Stephen J. Murphy, U.S. Atty. of the Eastern District of Michigan. By the mid 1990’s, the organization extended into other parts of the country, including Kentucky, Georgia, Missouri, California, and Texas.

As part of the conspiracy, BMF would use vehicles equipped with traps and hidden compartments to conceal and transport the cash generated from the sale of cocaine, prosecutors allege.

“The arrest of Mr. Arabov is the result of an unfortunate misunderstanding that we believe will be straightened out in the next several weeks,” a spokeswoman for Jacob & Co. told JCK. “We are confident that once the government is advised of all the facts surrounding these issues that all of the charges against Mr. Arabov will be completely dismissed.”

Since 2000, law enforcement officers from across the country have seized over 476 kilograms of cocaine destined for distribution by this organization, federal prosecutors said. More than $5 million in cash was seized by law enforcement officers between October 1997 and June 2005.

The statement further says that, “members of the organization used the illegal proceeds of their narcotic sales, purchased and leased numerous luxury vehicles, acquired and sold real property, and purchased jewelry while concealing the true source and nature of the funds involved in the transaction through false names and nominee purchasers.”

Prosecutors allege that members of the organization would deposit large amounts of cash derived from the sale of cocaine into various bank accounts; purchase cashier’s checks and money orders; and wire transfer these funds. “These funds would then be used to purchase assets and pay personal expenses with the goal of concealing the true source, nature and ownership of the funds which had been derived from the organization’s cocaine sales.”

Prosecutors also allege that members of the organization would purchase winning four-digit Michigan lottery tickets with drug proceeds from an individual who obtained them from the true winners in cash. These winning tickets, which prosecutors say are valued at more than $1 million, would be redeemed with the State of Michigan’s lottery bureau and used to purchase homes, make mortgage payments, and purchase vehicles, “hiding the fact that the true source of the money were derived from the drug organization’s cocaine sales,” the statement reads

The indictment also seeks criminal forfeiture of more than 30 pieces of jewelry, 13 residences, 35 vehicles, including Lincoln Limousine, BMWs, Range Rovers, Aston-Martin, and Bentleys, numerous bank accounts, over $1.2 million in seized currency, and a money judgment totaling $270 million. The real property is located in the Michigan cities of Detroit, Canton, Southfield, Ecorse, Romulus, Lithonia, Georgia, and Los Angeles, Calif.

In addition to Arabov, the newly indicted are: Eric Wayne Bivens, 35, Gwendolyn Deshawn Browen, 36, Chad Brown, 33, Paul Sheldon Buford, Jr., 36, Ronald Wayne Canyon, 44, Charles Edward Flenory, 58, Nathan Ashley Gleton, 44, Wayne Darnell Joyner, 48, Maurice Pierre-Gordon King, 25, David J. Solomon, Jr., 32, Larry Van Steele, 39, Randy Steele, 32, William Richard Turner, 37, David Walker, 25 and Marlon Terrell Welch, 25.