More Dan Gertler and Glencore – WSJ

gertlerkabila-e1475244619953

LostMessiah – The Gertler, Fleurette, Katumba, Glencore…. Reported Long Ago

To our faithful readers and to the journalists and law enforcement who read our pages: 

We uncovered the abuses portrayed long ago. For a look into our investigations into Dan Gertler, Fleurette,  the death of Katumba, Glencore, the various violations and other unsavory practices, please go into our search bar and search the names. We reported about these issues nearly 2 years ago.

LM

Glencore-Controlled Miner to Be Fined by Canadian Authorities Over Congo Ops

Regulator expected to allege Katanga Mining hid risks of doing business with Israeli diamond merchant closely linked to Congolese President Joseph Kabila

Glencore GLNCY -3.44% PLC-controlled mining company and some of its current and former directors and executives have agreed to pay more than $22 million to settle Canadian allegations that they hid the risks of doing business with a controversial Israeli businessman closely linked to Congolese President Joseph Kabila, according to a person familiar with the matter.

The expected settlement between the Ontario Securities Commission, Canada’s biggest stock-market regulator, and Toronto-listed Katanga Mining Ltd. KAT -1.56% is related to the company’s business activities in Congo between 2014 and 2016, the person said.

The regulator is expected to name several of Katanga’s current and former executives and directors in the settlement and will focus, at least in part, on Katanga’s longstanding ties with Dan Gertler, the Israeli businessman who first invested in Katanga alongside Glencore in 2008, the person said.

The OSC is also expected to allege that Katanga lacked proper internal financial controls, leading it to overstate copper production and understate mining costs, potentially inflating the miner’s performance, according to the person familiar with the matter.

Glencore owns about 86% of Katanga. In 2017, Glencore purchased Mr. Gertler’s stakes in Katanga and another giant copper mine in Congo.

The settlement is expected to name Glencore’s former representatives on Katanga’s board, according to this person. Those individuals include Aristotelis Mistakidis, one of Glencore’s most senior executives and two other Glencore executives, Liam Gallagher and Tim Henderson. All three stepped down from the board in November 2017 after Glencore and Katanga confirmed the Canadian investigation. The probe was first reported by The Wall Street Journal.

Katanga said at the time it was shuffling the board to address weaknesses in its controls over financial reporting. Earlier this month, Glencore said Mr. Mistakidis would retire at year-end.

Katanga and the named individuals have agreed to jointly pay a fine of more than 30 million Canadian dollars ($22 million) to settle the allegations, according to the person.

The people named in the OSC settlement will be banned for certain periods of time from acting as a director or officer of a publicly traded company listed in Ontario, the person said.

The settlement is expected to be announced as early as this week. A panel of the OSC must approve any settlement agreement at a public hearing for it to take effect.

It’s unclear whether Katanga and the individuals admit to wrongdoing in the settlement.

Katanga Chief Executive Johnny Blizzard has also agreed to resign as part of the settlement, the person said.

Katanga’s settlement represents another reputational hit for Glencore and its operations in Africa. In July, the London-listed mining giant said it had received a subpoena from the U.S. Justice Department demanding records related to its compliance with American antibribery and money-laundering laws in Congo, Nigeria and Venezuela.

The Wall Street Journal reported that a focus of the probe is Glencore’s ties to Mr. Gertler.

Mr. Gertler in recent years has become a lightning rod for controversy. In 2016, he was a central figure in a $412 million settlement between the U.S. Justice Department and the Securities and Exchange Commission with New York hedge fund Och-Ziff Capital Management Group LLC. A businessman people familiar with the matter said is Mr. Gertler paid more than $100 million in bribes to Congolese government officials, including Mr. Kabila, to get beneficial terms for deals in the Central African country, the DOJ and SEC alleged.

A spokesman for Fleurette Group, Mr. Gertler’s main company in Congo, said it “has always acted appropriately and with integrity in the DRC. Nothing has ever been proven against the company or its executives in a court of law.”

A year ago the U.S. Treasury Department sanctioned Mr. Gertler, alleging he traded on a friendship with Mr. Kabila to amass a fortune through “opaque and corrupt” deals on behalf of multinational companies seeking to do business in Congo. Mr. Gertler has denied wrongdoing and has declined to comment on the Treasury allegations and Justice Department investigation.

The OSC is expected to allege that Katanga breached Canadian securities law by not disclosing the risks it faced by relying on Mr. Gertler to maintain relationships with Mr. Kabila, Congo’s president, according to the person familiar with the matter.

To continue reading click here.

Lev Leviev – Spotlights and Shadows and Diamonds

Diamond Smuggling Scandal Spotlights Shadowy Israeli Tycoon

By: AP

This Dec. 2, 2009 photo showsLev Leviev at a district court in Tel Aviv, Israel. Israeli police are demanding his return from Russia to be questioned of charges including smuggling, money laundering and tax offenses. (AP Photo/Ofer Vaknin)

 

Tel Aviv – A shadowy Israeli billionaire who made his fortune in the insular world of diamonds has suddenly found his empire in jeopardy after close associates were busted in a massive smuggling ring and an employee mysteriously plummeted to her death from his high-rise Tel Aviv office building.

 

Lev Leviev, known in Israel as the “king of diamonds,” has enjoyed close ties to Russian President Vladimir Putin and has a reputation for generous philanthropy to Jewish causes. But now, Israeli police are demanding that he return from Moscow for questioning on allegations of smuggling, money laundering and tax offenses.

It’s a stunning downturn for one of Israel’s most well-known tycoons. Born in the former Soviet republic of Uzbekistan, the 62-year-old Leviev immigrated to Israel as a youth in 1971 and began working as an apprentice in a polishing plant in Israel’s then-booming diamond industry. His meteoric rise saw him later establishing a plant of his own, and striking deals in Angola and Russia that briefly undercut the DeBeers diamond giant. He later branched out to real estate, construction and chemicals, with his Africa-Israel holding and investment company becoming a powerful player in the Israeli market and establishing Leviev as a precursor to a wave of Jewish oligarchs from the former Soviet Union who have become power brokers in Israel.

Though his net worth is estimated at more than $1 billion, Leviev suffered heavy losses in recent years because of his massive investment in Russia, where he is known to enjoy strong government support. Leviev, who moved to London a decade ago and recently relocated to Moscow, denies any allegations of impropriety and is currently negotiating terms of his return with Israeli police. But insiders say that even if he hasn’t been formally charged with a crime, his mere association with the suspects accused of smuggling some $80 million worth of diamonds hidden in briefcases over several years could be devastating to his brand.

“I can’t believe he would put himself in such a situation. He is still a strong oligarch, and this is not his style. A smuggling of this scale could topple businesses far larger than his,” said Alex Kogan, a journalist who has covered the oligarchs in Israel for the local Russian-language press. “Even if he is not involved, this whole affair will harm him greatly.”

Leviev’s son and brother were arrested in early November, along with four others, and are currently out on bail in what has been dubbed the “Black Diamond” affair.

The saga took a more tragic turn on Nov. 11, when Mazal Hadadi, a bookkeeper for Leviev’s diamond firm LLD, fell to her death from a small, elevated bathroom window on the 10th floor of his office building next to Israel’s Diamond Exchange.

The death was initially reported as a suicide, the supposed result of a breakdown following tough police questioning about the smuggling affair. The family acknowledges Hadadi was rattled by the investigation but insists the mother of three would never take her own life and was on her way to meet her husband after work when a mysterious call to her cell phone made her abruptly return to the office.

Israel’s reeling diamond industry has been trying to distance itself from the affair. With tens of thousands of employees in the 1970s, Israel was once the world’s largest diamond trading center but fell on hard times in recent years because of the proliferation of synthetic diamonds and outsourcing of polishing plants to countries like India, where wages are far lower. Dubai has also cut away at Israel’s status as the regional gateway for trading because of tax benefits for companies.

But Israel is still a leader in the polishing of large diamonds and a hub for e-commerce and technological developments. Though officially still a member of the Israel Diamond Exchange, Leviev hasn’t been seen in Israeli diamond circles in years as his business interests focused elsewhere and his brother took over the leadership at LLD.

An official in the industry, who spoke on condition of anonymity because of the ongoing investigation, said the affair has put a strain on other Israeli diamond dealers. The Israeli market is now considered to be a highly regulated industry that has cleaned up its act after decades of shady dealings and association with “blood diamonds” mined in conflict zones that financed human rights violations. In 2003, Israel joined the Kimberley Process by which members meet annually to discuss strengthening controls over conflict diamonds.

Leviev’s alleged motivations are also a mystery, since diamonds entering Israel only need to be declared and inspected rather immediately taxed.

For now, there are far more questions than answers. The Israeli media has been filled with trickles of information along with interviews with the bereaved bookkeeper’s family, criticism of police conduct and speculation over whether Leviev will return and be arrested.

In a statement, Leviev’s Israel office denied all allegations against its employees.

“Mr. Leviev and all of the companies under his control operate in accordance with accepted norms, adhering to the law,” it said. “We hope that this matter will be clarified quickly and the suspicions will be proven baseless.”

It’s the kind of attention Leviev has long tried to avoid, preferring to limit his media coverage to his philanthropy for the Chabad movement, a Hasidic sect that performs outreach to Jews around the world, rather than his diamond dealing.

“It’s a closed world where people like to keep their secrets,” said Kogan, the journalist. “He doesn’t like publicity and doesn’t like to stick out.”

Mr. Hadadi, We are Convinced Your Wife Did not Kill Herself Too, the “Black Diamond”

b3255-mazi-e1542870618267-640x400

‘I am convinced my wife did not kill herself’

Husband of woman who fell to her death at Ramat Gan stock exchange says police have more information than has been revealed to the public.

 

The circumstances surrounding the death of Lev Leviev employee Mazal Hadadi, still preoccupy the police and the family.

The husband of the deceased said Thursday that despite reports that there is no criminal aspect to the affair, he is convinced that Mazal did not commit suicide.

“The interrogators told me, ‘Do not listen to what they say outside, we’re still investigating,'” the husband told News 2.

“I received a telephone call from the Dan Region police in the morning and I was accompanied by my attorney Shishi Gas,” added Hadadi.”They asked me for her Facebook password and asked me a few questions, among other things, they wanted to know about certain phone numbers. When it was people I knew I told them who they were talking about.”

“With people I didn’t recognize I said I didn’t know. Some were her friends, some I did not recognize. They showed me boxes containing the investigation materials. And they told me to be patient,” he said.

The police have repeatedly stated that all the findings of the investigation, including security cameras and media analysis, indicate that Hadadi went up alone to the tenth floor – when no one was on the same floor. Hadadi fell to her death from the office building on the stock exchange in Ramat Gan last week, at the height of the investigation of the company in which she was employed.

“We reject the conclusion that Mazal committed suicide. We received other impressions from the police. They told us that after the shiva they will come with all the findings of the investigation, and we want to be patient until the truth comes out,” the Hadadi family said in response.

LLD’s Story versus the Investigation Story – the Death of Mazal Hadadi

differences

The Many Inconsistencies Between the LLD Story and the Investigation Team Regarding the Death of Mazal Hadadi

The chart is from the below article in Hebrew sets forth the many inconsistencies between the versions given to the press by Lev Leviev’s company LLD and the police on the night of and immediately following the death of Mazal Hadadi, an LLD bookkeeper. 
In the Red is the LLD version and in the blue is the Police version. The top row: “Reasons for death” LLD version – intolerable pressure on the employee as a result of the investigation was the reason for her death. The police version – they have reviewed the LLD claim and there is no connection between the handling of her interrogation and her death. Second column: “Information provided on the night of her death” LLD’s version “We are taking every step to provide all of the possible information and are reviewing all of the sides and believe that a picture is being painted that is causing damage to the information sources” [rough translation] The police version “The details provided by the company are inconsistent with the findings.”

At a later date, we will provide a better translation and hopefully this will get picked up by some of the English language papers which, despite the details often left out, are far better at translating than we are.

 Suffice it to say, there are inconsistencies between the two stories and we remain firm in our belief that LLD wanted to write a narrative that would be accepted by the public, namely that police pressure caused the death [by suicide] of Mazal Hadadi. 

 

Mazal Hadadi’s husband and children have stated that under no circumstances would she have killed herself. In other words, there is no amount of police pressure that would have caused her to toss herself out a 10th floor window. WE 

She returned from the train station after work to a floor on which she generally does not work. There are then about 40 minutes missing from her whereabouts as she entered the building to the time she died. We can’t say that anyone at the company actually pushed her out the window – we are not the investigation team. We can say that we believe she was pushed and the location of the death was to provide a shining example of what will happen to anyone who speaks to the investigators.

Mazal Hadadi was no fool. If the books were being cooked, even if she did not know it, LLD would have done everything in patterns, same time, same day, same week, same year, etc. There will not be any definable movement of money or diamonds that would look obvious. But if one of those times, or days, or movements was off, so were the rest. Hadadi likely could have found the pattern and provided details and we would guess she likely kept a record for herself, even if she had no reason to question the movements of money, inventory or whatever aspect was within her purview. 

מרביתם למדו זאת מציוץ של העיתונאי-הכתב לענייני משפט, גיא פלג, של חברת החדשות, אולם עדיין לא ידעו במי מדובר ובאיזו פרשה נחקרת. שמות משוערים רבים עלו בתקשורת, אך נראה כי במערכות השונות לא שיערו כי מדובר במנהלת חשבונות זוטרה בחברת LLD שבבעלות לב לבייב, אם לשלושה, בשנות ה-40 לחייה. מדובר בעובדת שנחקרה באזהרה מספר ימים קודם לכן במסגרת פרשת “יהלום שחור”, שבמסגרתה נחקר החשד להברחת יהלומים ולהלבנת הון על-ידי חברת LLD בשווי של כ-300 מיליון שקל.

עד מהרה ההשערות הפכו למציאות. פחות משעתיים בלבד לאחר המקרה הטרגי, נחתה הודעת חברת LLD אצל הכתבים, שממנה למדו כמעט כולם על זהות המנוחה. בהודעת LLD נכתב, בין היתר: “אנו ננקוט את כל הצעדים העומדים לרשותנו על-מנת לסייע לחקר מותה, ועל-מנת לשים קץ לתופעות קשות של רמיסת זכויות נחקרים וגרימת נזקים בלתי הפיכים, מתוך רצון לייצר כותרות תקשורתיות”.

וכך, במשפט אחד, מסגרה חברת LLD את השיח שאפיין את העיסוק התקשורתי הנרחב בפרשה בימים שלאחר מכן. עוד באותו ערב, שיגרה החברה הודעות עם פרטים הנוגעים, לטענתה, למקרה, תדרכה עיתונאים והעבירה חומרים התומכים בתזה, שלפיה מי שאחראים למותה של המנוחה, הם חוקרי המשטרה, שהפעילו עליה לחץ בלתי מידתי בחקירתה. כך, נחשפו הכול למכונת יחסי ציבור משומנת היטב, המבקשת מאיתנו להסיק מסקנות על התנהלות המשטרה בפרשה.

כל זאת, יוזכר, בזמן שחברת LLD מנהלת משא-ומתן מול רשויות אכיפת החוק בישראל, בנוגע להגעת בעליה, לב לבייב, לארץ לשם חקירתו בפרשה; ויום לפני הדיון בבקשת החברה לשחרור נכסיה שחולטו כחלק מהחקירה בפרשה.

עוד בנושא דין וחשבון

בלית ברירה, נאלצה משטרת ישראל למסור תגובה מטעמה עוד באותו ערב, שבה התייחסה להודעה שהוציאה החברה. בהודעת המשטרה נאמר כי “הפרטים שהובאו בהודעה לוקים באי-דיוקים מהותיים”.

המהירות שאפיינה את מערך יחסי הציבור המשומן היטב של LLD, כמו גם את קביעת המשטרה כי הפרטים שהובאו בהודעת החברה לוקים באי-דיוקים מהותיים, וזאת עוד בטרם החלה חקירת המשטרה בעניין – היו אולי ראויים פחות לאיזכור, אלמלא הפערים העצומים שהתגלו בין גרסת המשטרה לגרסת LLD, ובייחוד לאור מספר אי-דיוקים שכבר כעת ניתן להצביע עליהם בגרסה שהציגה החברה ביום האירוע וביום שלמחרת.

אגב, מאז מסרבים בחברה למסור פרטים נוספים ולהשיב על שאלות, ומותירים את הזירה התקשורתית למשפחה ולרסיסי המידע שמגיעים מהמשטרה באופן לא רשמי.

שיחה עם עורך דין – שתי גרסאות

ההודעה המהירה של החברה של לבייב שהטילה על המשטרה את האשמה למות העובדת, לא מפחיתה כהוא זה מהחשיבות הרבה שיש לייחס לשאלות המטרידות שעולות ביחס להתנהלות המשטרה במסגרת החקירה של פרשת “יהלום שחור”. בפרשה זו נמתחה ביקורת, לעתים חסרת תקדים בחריפותה, על התנהלות המשטרה מצד שופט בית משפט השלום בראשון-לציון, גיא אבנון, עוד מהדיון הראשון להארכות המעצר של החשודים בפרשה.

נושאים נוספים בהם תוכל/י להתעדכן

בנוסף, סנגורי החשודים העלו כבר מתחילת הפרשה טענות קשות על התנהלות המשטרה בעניינם של החשודים בפרשה, טענות שהלכו והחריפו עם התקדמות החקירה, והגיעו לשיא לפני כשבועיים. זאת, כאשר מנעה המשטרה מפגש של חשוד עם עורכת דינו. מדובר בטענות מהותיות וחשובות, שראוי שיישמעו ויקבלו מקום מרכזי, כפי שביקשה חברת LLD כי ייעשה.

כמו כן, כפי שפורסם ביום ראשון ב”גלובס”, גם לבכירים לשעבר במערכת אכיפת החוק, סנגורים בכירים ודמויות בולטות מהאקדמיה, יש ביקורת נוקבת על התנהלות המשטרה בחדרי החקירות. גם הם מבקשים לרתום את העיסוק התקשורתי באירוע, על-מנת לשטוח את טענותיהם בדבר רמיסת זכויות חשודים.

ועם כל אלה, היום כבר ניתן לומר, במידה גבוהה של ודאות, כי חלק מהפרטים שמסרה חברת LLD באותו ערב נורא, התבררו כשגויים. כך, למשל, באותו ערב שבו אירע האירוע הטרגי מסרו גורמים בסביבת החברה כי למנוחה לא התאפשר להיוועץ עם עורך דין. לעומת זאת, מסביבת המשטרה נודע כי למנוחה הוצע להיוועץ עם עורך דין מספר פעמים.

לאור דבריו של בעלה של המנוחה בכלי התקשורת השונים, כיום כבר ברור כי ללא כל קשר לשאלה – כיצד נהגו בעובדת  המנוחה חוקרי המשטרה, הרי שלפחות בנוגע לזכות ההיוועצות נראה שהם קיימו את חובתם. בעלה של המנוחה העיד כי החוקר שהתקשר אליו באמצע חקירתה הפציר בהם לשכור את שירותיו של עורך דין. אמנם הבעל מתאר זאת כאמצעי לחץ שהופעל על רעייתו הנחקרת, אך לאור דבריו נראים דברי החברה כלא מדויקים, בלשון המעטה.

 

To read the remainder of the article click here.

 

Klein Arbitration Award – Was the Decision Consistent with Historical Implications?

diamonds-938490_960_720In diamond moguls’ fight over $200 million arbitration award, jurisdiction was key

(Reuters) – The well-chronicled Israeli billionaire Lev Leviev, sometimes called the “King of Diamonds,” won confirmation this week of an arbitration award against another international diamond dealer, Julius Klein, in federal court in Manhattan. All told, Leviev’s judgment against the Klein entities, which had been his partners in three joint ventures, totals about $209 million.

That number, as well as Leviev’s outsized persona, made U.S. District Judge Jesse Furman’s just-unsealed opinion fodder for the New York tabloids – especially because one of the arbitrators who originally awarded Leviev all of that money was convicted of tax fraud in Belgium in the middle of the Klein arbitration. Litigation over the validity of arbitration awards is usually pretty dry stuff. The facts of the Leviev case are about as sexy as these things get.

But there’s also a pretty interesting legal question at the heart of Judge Furman’s opinion. This case mostly hinged on the appropriate jurisdiction for the Kleins’ challenge to the arbitration award, since New York State Supreme Court and federal district courts are guided by different precedent on the significance of an arbitrator’s criminal record. The Kleins, as you’ll see, tried to use Leviev’s own previous resort to state court against him. Leviev, meanwhile, had to convince Judge Furman that he was a defendant, even though he was the one who initiated the arbitration. In the end, Judge Furman said, the Kleins lost their “far from frivolous” attack on the arbitration award because federal law requires deep deference to the arbitrators’ decisions. Had the challenge been heard in state court, the outcome – and the tabloid headlines – might have been quite different.

Leviev brought the arbitration in February 2013, after he and the Kleins couldn’t reach an agreement on a fair buyout price from their 10-year joint venture. (This account is drawn from Judge Furman’s opinion.) Leviev and the Kleins each chose one arbitrator; the arbitrators selected the third member of their panel, Jacob Bronner. Bronner, like the other two arbitrators (and, for that matter, Leviev and the Kleins) is in the diamond business. He disclosed that he had professional relationships with the other arbitrators and a social acquaintance with Leviev but said those engagements should not create justifiable doubt about his impartiality.

At around the same time as Bronner’s appointment, Leviev filed a petition in New York State Supreme Court, seeking a preliminary injunction against the Kleins for the duration of the arbitration. The state court judge denied the petition, holding that Leviev should address his request for an injunction to the arbitrators. In December 2013, the arbitration panel awarded Leviev an interim judgment of $102 million. In 2014, after the Kleins paid him about $67 million, Leviev went back to state court to have the $102 million interim award confirmed.

The Kleins opposed confirmation, arguing both that it was premature because the award was not final and that Bronner had engaged in misconduct by failing to disclose the extent of his relationship with Leviev. The state court judge agreed Leviev had jumped the gun by seeking confirmation of an interim award but also ruled that the Kleins had waived the right to object to Bronner’s participation on the panel because they allowed the arbitration to proceed after they learned of his connections to Leviev.

In early 2016, after more unpleasantries involving alleged conflicts amongst the arbitrators, the panel held a seven-day hearing in Israel. Before the arbitrators ruled, however, the panel’s own counsel disclosed to Leviev and the Kleins that Bronner had been convicted in Belgium, along with about 100 other defendants, “of tax fraud and other offenses relating to a scheme involving the use of sham transactions to nominally export diamonds from Belgium while, in fact, reselling them on the black market,” as Judge Furman described the offense.

Continue reading

Leviev v. Klein – Devastating Corporate Divorce – Something Missing….

 

 

Theory: The Current “Black Diamondgate” Smuggling Investigation in Israel may be Reason to Reconsider Klein Ruling

In February/March of 2017, it was announced by numerous papers that the US Federal Court had upheld an arbitration award against the Julius Klein Group, in an ongoing and very messy corporate divorce. We believe that the courts got the decision wrong and the basis of our comments is a single sentence reported by The NY Post on September 18, 2013, when the battle between the parties began. 

In an article entitled: Diamond king in heated battle with jewelry partners

It is quoted as follows:

“The two sides first joined forces in 2002, and Leviev claims he has a 43.5 percent interest in the joint venture, KLG Jewelry.

But Leviev, 57, says he hasn’t been paid any profits since last September as the parties have attempted to reach a settlement agreement for a “complete corporate divorce.”

Leviev wants the court to prevent his colleagues from selling “highly mobile and not easily traceable” diamonds.”

In 2013 Leviev, by his own admission, acknowledged the mobility of diamonds, the ease with which they could be transported from one place to another and frankly, how easy it would be to hide assets in either uncut or unmarked diamonds. We believe that with the new investigation into Leviev and a potential well orchestrated diamond smuggling operation in Israel, the Kleins may have legally available means to open this case for a reevaluation. In other words, who was really hiding what from whom? Were the Kleins really hiding assets or was Leviev manipulating a system he knows all to well.

We have posted for further reading information of interest, including a number of the legal opinions. We have been through the cases and the arbitration information and we do not think that the result was appropriate, particularly in retrospect.

We also question the integrity of the arbitration and by implication the ligitation that followed given Leviev’s own position at the time and the current “Black Diamondgate” investigation in Israel.

Read as follows:

The lawsuit information:  

http://static.reuters.com/resources/media/editorial/20170301/levievvklein–opinion.pdf

Lev Leviev Secures $209 Million Judgment Against Julius Klein Group

Published On: Tue, Feb 28th, 2017

Lev Leviev Secures $209 Million Judgment Against Julius Klein Group

Julius Klein Group asset seizure efforts to commence; Klein Family Martin, Abraham, Moishe and Malka Klein Personally Liable for Debt

lev-leviev 514x360
A Manhattan federal judge on Monday has confirmed an arbitration award holding Julius Klein Group and four of its principals responsible for paying $209 million to LGC USA Holdings, Inc., an affiliate of the Leviev Group led by Israeli billionaire Lev Leviev.

Leveiev accuses his business partners Julius Klein Group, led by Martin, Abraham, Moishe and Malka Klein of freezing him out of three highly lucrative gem companies, in the Manhattan civil suit.

In what may be a record judgment in the diamond industry, Judge Jesse M. Furman confirmed an arbitration ruling from last year and ordered the Kleins to be responsible for paying LGC $142 million immediately. In addition to more than $66 million that has already been paid, for a total of $209 million. This representing the face amount of the award of $111.9 million plus prejudgment interest at 9 percent from Feb. 2014 – Feb. 2017.

The federal court judgment also includes prejudgment interest in the amount of $27.9 million each day from Feb. 2014 – Feb. 2017, the date of entry of the final judgment.

The Julius Klein Group unsuccessfully claimed that the substantial financial award should be set aside because the arbitrators were allegedly biased and corrupt. But the judge rejected these and all of the Kleins’ other arguments in ruling for LGC.

Lev Leviev and the Julius Klein Group formed a joint venture KLG Jewelry in 2002 where Leviev had a 43.5 percent stake.

LGC, led by president Chagit Sofiev-Leviev, intends to pursue collection in a vigorous manner from the debtors including Julius Klein Diamonds LLC, Julius Klein Group Holdings LLC, Julius Klein Diamonds Inc, Klein Tenancy, KLG Jewelry LLC, Sunrise Venture LLC as well as Martin Klein, his wife Malka Klein, his business partner Abraham David (A.D.) Klein and A.D.’s son Moishe Klein.

“The Leviev Group will take all steps available, including seizing corporate and individual assets, to collect this judgment after the lengthy legal procedures now have resulted in this final ruling,” said Charles Michael, the partner at Steptoe and Johnson who represents the Leviev Group.

The Julius Klein Group had tried to keep the arbitration loss secret. As one news report described: “Lawyers for Leviev’s nemesis, the Julius Klein Group, desperately tried, and failed, to seal the Manhattan federal court case related to the whopping award.”

During the arbitration, the Kleins engaged in unseemly stalling and threatening tactics to derail the arbitration, including the filing of a rabbinical proceeding against one of the arbitrators.

 

 

ADDITIONAL SOURCES:

Inside the Leviev–Julius Klein Corporate Divorce

https://www.jckonline.com/editorial-article/inside-the-leviev-julius-klein-corporate-divorce/

“Given this has become a high-profile case, it’s worth looking at its background. Prior to the lawsuits and arbitrations, the two sides had been partners for more than a decade. According to an affidavit signed by Lev Leviev, in 2001, his company and the Kleins created two companies, Sunrise and Vivid Collection. (The latter eventually shut down amid a lawsuit.)

Following that, Leviev became joint venture partners with the Kleins in three companies: Julius Klein Diamonds, Sunrise Ventures, and KLG (which runs the Leviev retail chain). For years, the Klein family operated those businesses. The Klein side claims that Leviev was never involved in its day-to-day operations, but the Leviev side griped in a complaint filed in New York State Court in September 2013 that “the businesses were operated in secret, without providing [LGC] any of the information they were entitled to concerning these entities’ operations.”

In 2012, LGC wanted out, and eventually decided to be bought out of all the partnership companies. The current dispute is over the valuation of LGC’s stakes in those companies.

Following industry custom, this issue was meant to be a settled by an arbitration, which commenced in May 2013. The Klein and Leviev sides chose one arbitrator apiece—Chaim Pluczenik and Israel Zahavi, respectively. Zahavi and Pluczenik picked the third, “neutral” arbitrator, Jacob Bronner. Pluczenik later resigned, calling the process “biased” and “unfair,” and was replaced by Eytan Cohen.”

 

Federal Court Enters Judgment Holding Julius Klein Diamonds, Its Principal Martin Klein & Three Others Responsible for Paying $209 Million to a Lev Leviev Company

https://www.businesswire.com/news/home/20170228006120/en/Federal-Court-Enters-Judgment-Holding%C2%A0Julius-Klein-Diamonds

“The Julius Klein Group unsuccessfully claimed that the substantial financial award should be set aside because the arbitrators were allegedly biased and corrupt. But the judge rejected these and all of the Kleins’ other arguments in ruling for LGC. (A detailed opinion is expected to be publicly released.)”
The litigation is LGC USA Holdings, Inc. v. Julius Klein Diamonds, LLC, et al., U.S. District Court for the Southern District of New York, Case Nos. 16 Civ. 5294 and 16 Civ. 5352.

 

Lev Leviev Wins $209M Judgment Against Julius Klein Group

http://idexonline.com/FullArticle?Id=42902

“The case has been bitterly contested and led to death threats and an alleged smear campaign to the arbitrator initially assigned to decide on it, the New York Post reported.”
“A Manhattan federal judge ordered the Julius Klein Group to pay $142 million to Leviev’s LGC USA Holdings. That sum is in addition to the more than $66 million that has already been paid, according to the report.”

Police Not Negotiating Terms with Leviev for Interrogation

jpg (1)

Police refuse to negotiate terms with Israeli diamond magnate Lev Leviev

Diamond magnate suspected of smuggling goods worth £62.7 million into the country

Israeli police are refusing to negotiate terms over how to question the diamond magnate Lev Leviev, who faces allegations of money laundering and smuggling.

Dozens of employees in Mr Leviev’s LLD conglomerate have been questioned in the investigation — codenamed “Black Diamond” — under which several close associates and family members, including his son Zvulun, have been arrested and since released to house arrest.

Police suspect that, alongside the legal import of diamonds from Mr Leviev’s factory in Russia, LLD employees smuggled undocumented diamonds worth around 300 million shekels (£62.7 million) into Israel over the past decade.

Diamonds, bank accounts and private property belonging to Mr Leviev and LLD have been confiscated as part of the investigation.

Mr Leviev has said he is willing to be questioned in Russia, where he is presently based, or to travel to Israel on condition he is then permitted once again to leave.

A police spokesman said: “we do not negotiate with suspects before questioning.

“[He] will be questioned when he arrives in Israel. We do not agree to any preliminary conditions.”

But the investigation took a tragic turn last week when Mazal Hadadi, a 42 year-old book-keeper at LLD, fell to her death from the tenth floor of the Diamond Exchange building in Ramat Gan.

Police are treating her death as a suicide, although some of relatives claimed she may have been murdered.

Sources in LLD have accused the police of aggressively questioning and pressuring Ms Hadadi.

jpg
Three suspects arrested in connection with the alleged diamond smuggling scheme arrive for a Rishon Letzion court hearing earlier this month (Photo: Flash 90)

Mr Leviev, who has homes in Israel and Russia, emigrated to Israel as a teenager in 1971 and established one of the largest privately-owned diamond trading companies in the world.

He also built up an international real estate empire, Africa’s Israel Investments, which nearly went bankrupt in 2008 global financial crisis.

He had lived for much of the past decade in a mansion in Highgate, north London, on the gated Compton Avenue close to Hempstead Heath.

But last year he relocated to Moscow and has rarely been seen in public since.

It is unclear whether his departure from London was due to police investigations or to the change in Britain’s visa requirements of Russian business-people — which also meant that Mr Leviev’s friend and ally Roman Abramovich, the owner of Chelsea Football Club, received Israeli citizenship in May and has not returned to Britain since.

Both men are known to be members of the circle of oligarchs close to Russian President Vladimir Putin.

Mr Leviev has for years been one of the main patrons of Chabad and has financed its Or Avner education network in the former Soviet Union.