A federal judge in California has ruled that Sotheby’s may be responsible for the loss of 45 Vivid yellow diamonds worth $4 million, IDEX Online reports.
In 2019, M&L Financial, a consulting and brokerage firm based in Dallas, Texas, took the gems to Sotheby’s New York for auction on consignment. They told Sotheby’s that they were the exclusive owners of the diamonds but later, according to papers from the Superior Court of Los Angeles County, the auction house released the gems to another party without telling the company.
According to court papers, Jona Rechnitz, owner of Jadelle Jewelry and Diamonds in Beverly Hills, owed M&L “substantial” sums. As security for his debt, he transferred ownership of the diamonds to M&L on the understanding that he could later buy them back at a fixed price. Rechnitz proposed M&L list the diamonds with Sotheby’s. Supposedly, Sotheby’s later released the diamonds to a man who was picking them up on Rechnitz’s behalf. The auction house did not notify M&L.
In its judgment, the California court reversed a judgment by a lower court and found against Sotheby’s. It said it was reversing “the judgment and remand for further proceedings regarding M&L’s breach of contract claim. We award costs to M&L.”