A fight for ownership of the 840-pound Bahia emerald may have come to an end after a judge issued a tentative ruling granting a claim to title to the gem to three businessmen who say one of their members paid $1.3 million for the precious stone and that they collectively kept possession of it until it was taken into the custody of the Los Angeles County Sheriff’s Department in 2008.
Los Angeles Superior Court Judge Michael Johnson issued a tentative ruling Thursday finding that Ferrara Morrison Holdings’ members were “bona fide” purchasers of the emerald.
“FM Holdings has presented evidence establishing clear title to the Bahia Emerald as against all other ownership claims,” Johnson wrote in his 14- page decision.
The cluster, mined in Brazil in 2001, contains about 180,000 carats of emeralds in nine gigantic crystals, one about as big around as a man’s leg. At one point, as many as eight parties laid claim to the find. But all have either settled with Ferrara Morrison Holdings or been eliminated from contention, leaving it up to the business group to convince Johnson that their claim of ownership was authentic.
Johnson heard testimony from all three members of FM Holdings on May 14 and then took the case under submission.
Plaintiffs’ attorney Andrew Spielberger said after the hearing that if Johnson ruled in favor of his clients he expected the judge to order the sheriff’s department to release the emerald barring any last minute intervention by the nation of Brazil.
The emerald was mined in the Brazilian state of Bahia in 2001. Through a complex series of transactions, it was eventually brought to the United States. At one point it was stored in New Orleans, where it was partially submerged in water during Hurricane Katrina.
In March, lawyers for Brazil asked Johnson to dismiss all remaining claims among U.S. parties to the emerald and allow the South American country to try to have it returned. But Johnson said two trials have already been held in the case at considerable expense to the parties and taxpayers. Meanwhile, the sheriff’s department has gone to the trouble of taking responsibility for the safekeeping of the gem, Johnson said.
“Brazil has done nothing whatsoever to assert an interest or to give the courtesy of giving notice of its interest in the case,” Johnson said.
The emerald is estimated to be worth as much as $400 million. In their court papers, the lawyers for Brazil said the gem was “priceless.”
FM Holdings is composed of Kit Morrison, Todd Armstrong and Jerry Ferrara. Morrison maintains that his payment of $1.3 million makes him a “good- faith purchaser” of the gem under law. He says he voluntarily turned it over to the sheriff’s department in 2008 after businessman Larry Beigler raised questions about its ownership.
He said his group had recently moved the emerald from a private security vault in South El Monte to a similar facility in Las Vegas so it could be more easily displayed and presented to high-end buyers for possible purchase.
Beigler and Ferrara were former business partners who had hoped to present a deal to Morrison to purchase diamonds, but decided to offer the emerald to him for $1.3 million in case the diamond deal fell through, Morrison said. He testified he accepted the offer and that the diamond purchase indeed never came to fruition. He said Ferrara later became a partner with him in FM Holdings.
Morrison said he did not challenge the request by the sheriff’s department to hold the gem until a resolution was reached. He said he showed them papers documenting the group’s claim to the gem and that the deputies told him this was the first time they had seen the information.
“They were acting in good faith based on bad information they were given,” Morrison said. “I agreed to turn it over in hope we could come to this venue and clear up title.”
Morrison said he hoped the legal battle over the gem would not last more than three to four months. However, one of the claimants, miner Kenneth Conetto, filed the current case in January 2009 and no decision was reached until Thursday’s tentative ruling. Conetto is one of the former parties who settled with FM Holdings.
Ferrara said the LASD has not told members of FM Holdings where the emerald is being held and will not let them see or photograph it.
—City News Service