12 January 2015
A new claimant — the Brazilian government — has come into the long and contentious court battle over the Bahia Emerald, an 840-pound gemstone worth as much as $400 million.
"The Bahia Emerald is a national treasure of The Federative Republic of Brazil that was illegally mined, illegally transported, illegally exported to the United States and almost certainly illegally imported into the United States," John Nadolenco, a partner at Mayer Brown in Los Angeles, wrote in a motion he filed on Brazil's behalf on Sept. 15 to specially appear in a case involving competing claims over the gem. A judge in Los Angeles is set to hear Brazil's arguments on Jan. 28.
"Instead of being in a museum in Brazil where it can be admired for its stunning size and other attributes, it is the subject of this action by a number of parties who claim they somehow own it," he wrote. "They don't."
The 180,000-carat emerald, discovered in 2001, ended up in the hands of more than half a dozen American businessmen who, citing various financial deals, all claimed to own the gem. The dispute landed in a Los Angeles courtroom, where a judge has dismissed one person from the case.
The saga, and the myriad claims to ownership of the gemstone, has been documented in newspapers across the globe and in a 2012 National Geographic documentary. At some point, the stone arrived in the United States and was shipped to various sites in California, Louisiana and Nevada, even spending time under water in New Orleans following Hurricane Katrina. At one point, it was auctioned on eBay.
In 2009, a California businessman claiming to own the emerald filed a petition for its return from the Los Angeles County Sheriff's Department, which had confiscated it from a vault in Las Vegas. The petition prompted other claimants to intervene.
Last year, Los Angeles Superior Court Judge Michael Johnson, in a bench trial, dismissed a California man's claim to have bought the emerald for $60,000 as having "no sense or logic." Johnson has yet to decide the claims of the others.
Brazil, meanwhile, spent years investigating potential crimes associated with the gem's taking. According to its court filing, the government has filed a Mutual Legal Assistance Treaty, or MLAT, request with the Department of Justice. Foreign governments typically use such requests in pursuit of evidence or people in the United States in criminal investigations, typically involving money laundering or financial fraud, said T. Markus Funk, a Chicago attorney who is founding co-chairman of the American Bar Association's Global Anti-Corruption Committee.
But, according to the filing, the Justice Department on June 3 said it could no longer "help Brazil pursue the matter 'at this time' " and recommended the government retain a lawyer. Its reason for rejecting the MLAT request was redacted. Funk, co-chairman of Perkins Coie's supply-chain compliance practice, said the DOJ's response was unusual.
"The normal course is requests for assistance pursuant to MLATs are granted, and either the requested evidence is found or not," he said. "It's more unusual to find the U.S. government essentially sitting on or analyzing a request for a long period of time and after that period of time saying, sorry, we won't be able to help you."
Brazil turned to the court in Los Angeles, seeking a stay or dismissal of that action. The government argued that the Bahia Emerald is a national treasure that was illegally mined and exported. In any event, officials said, the stone is a cultural artifact that should be preserved in a museum.
Lawyers for the businessmen who remain in the case did not respond to requests for comment. In court papers, they questioned why Brazil waited so long to get involved. Brazil claims it didn't know about the emerald's location until 2011, when U.S. Immigration and Customs Enforcement authorities inquired about its rights to the gem. Since then, Nadolenco said, the government been working through diplomatic channels to get the emerald back. "It should never be too late to do the right thing with regard to something that is part of Brazil's national heritage," he said.
Reprinted with permission from the 12 January 2015 edition of The National Law Journal © 2015 ALM Properties, Inc. All rights reserved. Further duplication without permission is prohibited.”