Federal judge halts release of massive Brazilian emerald

The more than six-year legal battle over the Bahia Emerald seemed to have reached a conclusion last month, when a Los Angeles Superior Court judge finally determined the owners of the prized gem.

The 180,000-carat, 751.77-pound behemoth of a gem, which has been held at a Los Angeles County Sheriff’s Department lockup for six years, was to be released as early as this week to the winners of the contentious legal saga.

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For the record

8:05 p.m.: An earlier version of this post said the Bahia Emerald weighs 840 pounds. Although earlier media reports have put the stone at 840 pounds, a judge’s ruling last month said it weighs 751.77 pounds.

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Not so fast, says the U.S. Department of Justice.

On Thursday, a federal judge ordered that the stone remain under lock and key, barring anyone, including those who won their claim to the stone, from moving or even seeing it.

The order, issued by U.S. District Court Judge Colleen Kollar-Kotelly, granted a request by the Department of Justice for a restraining order protecting the stone, arguing that it is subject to forfeiture in Brazil, where prosecutors in an upcoming criminal trial allege that two men knowingly received the stolen emerald and illegally smuggled it out of the country.

The request, which cites a treaty between the Federative Republic of Brazil and the United States, warned that the emerald, once valued at $372 million, could be sold or otherwise lost track of without the court’s intervention.

The gem, unearthed in 2001 from a mine in the state of Bahia in eastern Brazil, is a hulking mass of rock with tubes of protruding green crystals. It is among the largest unbroken stones of its kind.

Brazil’s Los Angeles-based lawyer, John Nadolenco, said the Brazilian officials have been working with the federal government to secure its return.

“The Bahia Emerald was illegally mined and unlawfully exported from Brazil,” he said. “This is an important step to returning the emerald to its rightful home.”

In May, Los Angeles Superior Court judge Michael Johnson granted ownership of the emerald to a holding company owned by three businessmen, who claimed the emerald became theirs when it was used as collateral in a $1.3-million deal for diamonds that fell through.

The company — co-owned by Idaho businessmen Kit Morrison and Todd Armstrong, and Jerry Ferrera of Florida — “has presented evidence establishing clear title to the Bahia Emerald as against all other ownership claims,” Johnson wrote in his decision.

Attorney Andrew Spielberger, who represents Morrison, said that he and his clients have gone through 6 1/2 years of litigation to successfully prove that they are the rightful owners.

“Now it looks like we’ll go through a bit more to actually obtain it,” he said.

After the gem’s discovery in 2001, miners transported it to Sao Paulo, where it began an eight-year odyssey during which it repeatedly changed hands.

In 2005, the gem was shipped to a self-trained geologist and mining entrepreneur in Northern California who knew the original miners. He said he shipped it to New Orleans, where Hurricane Katrina submerged the stone for weeks near the French Quarter.

After fishing it out, the man somehow lost possession of the gem, and it eventually ended up in the hands of Larry Biegler, an investor from Paradise, Calif.

In 2009, Biegler reported it missing from a South El Monte vault. Los Angeles County sheriff’s investigators tracked the emerald to a Las Vegas vault, where it was stored by Morrison and Armstrong.

Sheriff’s investigators could not sort out who owned the gem, so they confiscated it -- setting off years of litigation, in which eight different people at one time or another claimed ownership. Ultimately, the group led by Morrison won out.

Spielberger said that under Brazilian law, the country has a right of forfeiture of an asset like the emerald so long as there were no “good faith” purchases of the artifact.

“My clients have been determined to be good-faith purchasers of the Bahia Emerald,” he said. “My clients are the owners.”

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Times staff writer Victoria Kim contributed to this post.