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

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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.

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