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Originally published Thursday, November 15, 2012 at 12:39 PM

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Mastros’ $1.4 million diamond rings recovered, attorney says

Two rings with enormous diamonds were found in a safe-deposit box, the bankrupt developer’s lawyer says.

Seattle Times business reporter

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The giant Mastro diamonds have been found and are in the possession of French authorities, the Mastros’ French lawyer says.

The two rings, with stones of 27.8 and 15.93 carats and an estimated total value of $1.4 million, were recovered from a safe-deposit box in Annecy, a city in the French Alps, in the last few days, Thomas Terrier said Thursday.

Gayle Bush, an attorney for James Rigby, the court-appointed trustee in Michael R. Mastro’s sprawling bankruptcy case, said he couldn’t confirm that.

French authorities have recovered “a substantial number of pieces of jewelry” from two safe-deposit boxes, he said, “but we haven’t seen an inventory yet.”

The rings have played a pivotal role in bankruptcy and criminal proceedings involving former Seattle real-estate magnate Mastro and his wife, Linda, who were arrested Oct. 24 in a village near Annecy and remain in a jail near Lyon.

The couple disappeared in June 2011 after failing to comply with a bankruptcy judge’s order to turn over the rings. The judge ultimately ruled the jewels belong to creditors represented by Rigby.

A federal grand jury in Seattle has indicted the Mastros on 43 counts of bankruptcy fraud and money laundering. Ten of the counts involve the rings.

A French appeals court last week rejected the couple’s bid to be released — but kept under house arrest with electronic monitoring — while they await extradition proceedings. Terrier said he appealed that ruling Thursday to the French Supreme Court, and a decision could come in about a month.

But Terrier also said he’s likely to ask the appeals court to reconsider its ruling in light of the recovery of the rings and other Mastro assets.

“There is absolutely no risk of them escaping with the assets if they are released,” he said. “We are very sure they will not climb the Alps in November.”

Terrier said the Mastros told authorities about the safe-deposit box within two days of their arrest. But French police had to wait for a formal request from American authorities before they could open the box, he said, and that didn’t come until Nov. 5.

It’s unclear why it may have taken another week before the jewels were recovered.

Terrier also said the Mastros had duplicates made of the rings, and Linda Mastro, 63, wore the copies to parties.

Mastro, 87, is mystified by the criminal charges against him, Terrier said. “To his knowledge he is not a criminal.”

As for the couple’s flight from the U.S., “That was something that shouldn’t have happened,” the attorney said. “I don’t know what was in their minds at the time.”

Michael Mastro was a prolific Seattle real-estate deveoper and lender for 40 years until the financial crisis undermined his highly leveraged real-estate empire.

He was pushed into one of the largest bankruptcies in Washington’s history in July 2009. His debts to unsecured creditors have been estimated at $250 million; so far those creditors have recovered slightly more than a penny on the dollar.

Rigby has hired lawyers in France, and the trustee himself has been in that country this week. Terrier said Rigby’s representatives and French criminal authorities have been “racing” each other to recover assets, and police “are upset that someone is trying to duplicate their job.”

But Bush, Rigby’s lawyer, said he wasn’ aware of any conflicts. “We’ve been very happy with the cooperation of the French authorities,” he said.

Eric Pryne: or 206-464-2231

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