NEW YORK--(BUSINESS WIRE)--Following four years of litigation and repeated efforts to stall, including discredited personal allegations against a qualified arbitration panel, a Manhattan federal judge has entered a judgment holding the Julius Klein Group and four of its principals responsible for paying $209 million to LGC USA Holdings, Inc., an affiliate of the Leviev Group of Companies headed by Lev Leviev.
In what may be a record judgment in the diamond industry, the judge 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.
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.)
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. The arbitrators ruled against them nonetheless by issuing the award in LGC’s favor, which now has been confirmed as a court judgment.
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.