Two diamond dealers staged an elaborate, phony heist at their shop in hopes of claiming $7 million in insurance to rescue their faltering business, but their machinations were captured on a surveillance system they'd tried to disable with drain cleaner, prosecutors said as the dealers' trial opened Monday.
Defense lawyers said the New Year's Eve 2008 incident at Dialite Imports was a real robbery, and there was no proof that co-owners Mahaveer Kankariya and Atul Shah were involved.
When first reported, the incident was a bizarre and brazen midafternoon robbery that made tabloid headlines. Two thieves, disguised as Hasidic Jews, forced Shah at gunpoint to open the safe in Dialite's office in Manhattan's Diamond District, then tied up Shah and an employee before leaving with millions of dollars' worth of jewels, authorities were told. Police found plastic ties, duct tape and disarray when they arrived, officers testified Monday.
But it was all a hoax, Assistant District Attorney Eugene Hurley said Monday. Authorities have said the gem dealers were six months behind on rent and at least $1 million in debt.
"To deal with their financial problems, they tried a desperate gamble," Hurley told a judge, who is hearing the case without a jury at the diamond dealers' request.
Despite the drain cleaner poured on the surveillance system, investigators were ultimately able to see images of the conspirators removing jewels from the safe and putting in empty boxes hours before the supposed hold-up, Hurley said.
Defense lawyers called the prosecutors' account speculation.
"This is a theory without a case," Shah's lawyer, Benjamin Brafman, said in his opening statement. Moving jewels in and out of the safe was an everyday activity in Dialite's business, not a sign of a scheme, he said.
Kankariya's attorney, Michael Bachner, said outside court that the case amounted to an insurer's effort to avoid having to pay a claim.
Representatives for Dialite's insurer, Lloyd's of London, didn't immediately respond to e-mail inquiries Monday.
Shah, 49, and Kankariya, 44, have pleaded not guilty to insurance fraud and other charges. If convicted of the most serious charge, they face at least one year and as many as 25 years in prison.
Another jewelry dealer, Edward Fried, was arrested last year on accusations that he acted as one of the costumed robbers, but the case against him was dismissed. No other suspects have been charged.
Hasidism is a branch of Orthodox Judaism. Believers wear distinct dark clothing and fedora-style hats, and they often have long beards and earlocks.