Mastro case gets new life in court
The widely watched legal drama starring Michael and Linda Mastro has been renewed for another season by a federal appeals court in San Francisco, which ruled that even though Linda fled to France she is entitled to appeal a bankruptcy court ruling about her big diamond rings and other assets.
Seattle Times deputy business editor
The widely watched legal drama starring developer Michael Mastro and his wife, Linda, has been renewed for another season by a federal appeals court in San Francisco.
The upcoming episodes, however, may not have the same draw as earlier chapters that focused on the former Medina couple’s fight to stay on the lam in France and to hold on to a small fortune in jewelry.
A three-judge panel of the 9th Circuit Court of Appeals recently gave new life to the drama. It ruled U.S. District Judge Barbara Rothstein in Seattle had erred in deciding that because Linda Mastro demonstrated a “blatant disregard for the authority of the judicial system,” the district court didn’t need to consider her appeal of the bankruptcy court’s original ruling that her jewels should go to Michael Mastro’s creditors.
As a result, last week Linda Mastro’s appeal of the bankruptcy judge’s order to hand over the jewels was reopened.
A recap of our story thus far: After longtime real-estate developer and lender Michael Mastro was forced into Chapter 7 bankruptcy by creditors in 2009, the bankruptcy court ordered Linda Mastro to turn over two big diamond rings — 27.8 and 15.93 carats — as well as gold bars and money worth $1.39 million.
Linda Mastro appealed that decision to the federal district court. But because she and her husband had fled to France in 2011 and were subsequently indicted on criminal bankruptcy-fraud and money-laundering charges, the district court invoked the “fugitive disentitlement doctrine,” saying that escaping the reach of U.S. law “renders her ineligible to pursue an appeal.”
Not so fast, the 9th Circuit panel said last month. Mastro is entitled to have her lawyers argue her appeal of the bankruptcy ruling before a district court judge, it said, because the Supreme Court has declared disentitlement “is too blunt an instrument” to be applied in most noncriminal cases.
Even if the original bankruptcy ruling about the two massive rings is overturned, the baubles themselves are presumably beyond the reach of either the court or Michael and Linda Mastro, who are now 89 and 64 years old, respectively.
When they were arrested in France in 2012, a bounty of jewelry, including the two rings, was seized from their apartment in the foothills of the French Alps.
A French court last year ruled on humanitarian grounds that the pair should not be extradited to the U.S. because of their age; but the seized property was returned to Seattle and added to the bankruptcy estate.
Bankruptcy trustee James Rigby in June auctioned off racks of Chanel purses, Manolo Blahnik shoes and other luxury goods that had belonged to the Mastros.
He said at the time that the 27.8-carat ring had been sold separately for $1 million, and that he expected to sell the 15.93-carat ring for another million. Rigby said then he had recovered about $22 million in Mastro assets.
He and his attorneys could not be reached Tuesday for comment, and a call to Linda Mastro’s attorney in the appeal was not returned.
Rami Grunbaum: 206-464-8541 or email@example.com