Lazare Kaplan International (LKI), a New York diamond manufacturer and rough-diamond dealer, has sued two Belgium banks for allegedly stealing $135 million worth of diamond sales, in cooperation with a diamond trader, and funnelling the money through various shell companies around the world. Lazare claims it was delisted from the American Stock Exchange and lost business with Diamond Trading Co, the sales and distribution arm of DeBeers, as a result of the theft. Lazare is seeking $500 million in lost proceeds and damages on allegations of money laundering and racketeering.

The lawsuit, filed in a federal New York court, alleges theft by KBC Bank and its subsidiary   Antwerp Diamond Bank (ADB) and claims "catastrophic damage to its business and property ...in concert with a complex web of individuals and entities controlled by or associated with defendant customer, Erez Daleyot."

Lazare alleges that from 2008-201, the banks cooperated with Israeli diamond trader Erez Daleyot, who was not named as a defendant in the lawsuit, to "transfer the diamonds through a series of legitimate and sham transactions that made them difficult to trace" and that KBC and ADB bank executives received $20 million in bribes from Daleyot accounts to assist with the scheme. The lawsuit also alleges that Mr. Daleyot apparantly used the money to purchase real estate, art, and a yacht. Both Mr Daleyot the Belgian banks in question have not commented publicly on the case.

ADB has previously sued Lazare in a Belgium court, seeking payment on a credit line it extended to Lazare. The case is still pending and has been rescheduled to be heard in September 2012. Lazare’s current suit is a counter claim to ADB’s proceedings and Lazare claims that the continued litigation has a "detrimental effect" on its ability to transact business.

"in the event that the company is unable to reach a negotiated settlement with ADB and KBC prior to the end of its second fiscal quarter ending November 30, 2011, the company intends to initiate proceedings in the United States against ADB and KBC seeking compensatory and punitive damages and/or pursue such other options it determines would be in the best interests of the company and its stockholders in order to resolve the remaining material uncertainties," stated Lazare in October
Lazare has also sued its insurers in the past for breach of contract related to policies covering the lost diamonds. The insurers settled the case for $60 million.

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