Famed Jeweler Arrested on Fraud, Embezzlement-Related Charges

Vintage pieces adorned celebrities' necks, ears in magazines

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    WEST HOLLYWOOD, CA - FEBRUARY 19: Actress, Mira Sorvino and owner of Fred Leighton Jewelry, Ralph Esmerian attend the celestial diamond affair for 2007 at the Soho House on February 19, 2007 in West Hollywood, California. (Photo by Marsaili McGrath/Getty Images) *** Local Caption *** Mira Sorvino;Ralph Esmerian

    A famed Manhattan-based dealer and collector of jewelry and art has been arrested by postal inspectors on fraud- and embezzlement-related charges.

    Ralph Esmerian, a fourth-generation jeweler, one-time owner of Fred Leighton jewelers and Chairman Emeritus of Manhattan's American Folk Art Museum, was arrested Monday morning.  Officials sad he committed fraud in connection with over $200 million in loans he received to help run his business.   

    "Ralph Esmerian allegedly lied and looted to maintain his personal and financial status by tricking his lenders, stealing from investors, and deceiving the bankruptcy court," US Attorney Preet Bharara said.

    A secretary reached at Esmerian's Rockefeller Center office declined NBCNewYork's request for comment, and said an attorney would provide more information soon.   Investigators said Esmerian double pledged assets to fool creditors and they say he sold valuable jewelry that served as collateral for the loans in order to support his personal spending.

    While his pieces appear in celebrity homes and adorn museums, Esmerian's recent business history has been fraught with credit woes. Law-enforcement sources say some of the charges filed against him today are in connection with past bankruptcy filings.

    In July, Esmerian asked a bankruptcy judge to allow him to reorganize his New York-based business R. Esmerian Inc after creditors, claiming the jeweler owed them $40 million, endeavored to liquidate the company,  according to Bloomberg. He requested the court change the involuntary Chapter 7 bankruptcy petition to a voluntary one, which is traditionally employed when a company thinks it can reduce its debt.

    Two years prior, Esmerian filed for bankruptcy on behalf of Fred Leighton Inc., a retail jeweler he previously owned. In that case, Esmerian attempted to prevent Merrill Lynch from auctioning off his family heirlooms at Christie's to recoup a nearly $200 million loan, part of which he used to purchase Fred Leighton in 2006. A judge denied that request.

    According to its website, Fred Leighton specializes in vintage jewelry from the 18th, 19th and 20th centuries. Esmerian got his name selling rare colored gems, including Kashmir sapphires and pink diamonds, along with vintage brooches and necklaces. Fred Leighton jewelery has been featured on the covers of and inside an array of magazines, including Vogue and InStyle, worn by the likes of Nicole Kidman, Gwynenth Paltrow, Jennifer Hudson and Renée Zellweger.

    The 70 year-old jeweler could face 5-30 years if convicted.