The Long, Strange Saga of the 180,000-Carat Emerald
In the northeastern Brazilian state of Bahia, not far from the city of Pindobaçu, the land is creased like an accordion. There, the earth’s crust has been squished into a series of granite ridges separated by scrub-filled valleys. These folds are rich with the elements beryllium and chromium, which have worked their way into the cracked rock and cooled to form green hexagonal crystals—emeralds. Starting in the 1960s, thousands of prospectors, known in Portuguese as garimpeiros, have flocked here to mine. Descending hundreds of feet down shafts no wider than manholes, they risk their lives to hunt for the gemstones.
One of these shafts sits below a farm owned by an elderly man. One day in early 2001, according to an investigation by Brazil’s National Department of Mineral Production, a garimpeiro there emerged from the ground with an emerald formation far larger than anyone had ever seen. It was a dark, tombstone-size hunk of shale, with a dozen greenish columns jutting out like sticks of Kryptonite. Weighing 840 pounds, the rock matrix contained an emerald estimated to be 180,000 carats in size. At the time of its discovery, it was the largest uncut emerald in the world.
Like most of the emeralds from Bahia, it was cloudy and marred by impurities. High-quality stones from the world’s top mines, in Colombia and Zambia, can sell for thousands of dollars per carat, but a typical emerald from Bahia is worth less than $10 per carat. Many of its gems are used in costume jewelry. Others are exported to Arab markets, where they’re bought to decorate mosques and houses. Still others become collectors’ pieces, admired as geological novelties.
The Brazilian TV news program Fantástico reported that a local man bought the Bahia Emerald early on for $5,000 and subsequently sold it for $20,000. Details of the next transactions are sketchy—the emerald appears to have changed hands a few times before two men bought it around June 2001. Elson Ribeiro, a former bookseller and gold miner, and his partner, Ruy Saraiva, crated the stone, placed it on the bed of a pickup truck, and drove it away from Pindobaçu.
“There’s an entire subculture of people who will buy anything because of its size,” says Ronald Ringsrud, an American emerald expert. “The story is what sells the piece.” And a story is what the Bahia Emerald got. Whatever the gemstone is really worth—next to nothing or several hundred million dollars—court records show that it’s been traded around the world by a gang of con men, dupes, detectives, and double-crossers worthy of a Coen brothers movie. It might all be farce if not for who entered the dispute last fall: the nation of Brazil, which wants to get its rock back.
In the summer of 2001, Tony Thomas was 37, flush with cash, and trying to get a foothold in the technology industry. He had never been to college, but the construction company he owned, which specialized in laying gas and electric lines underground, was booming. “This was the dot-com era,” he says, “when anything anyone did in the Silicon Valley was taking off.”
Thomas styled himself an investor. He’d poured more than $200,000 into a high-definition TV company in Los Gatos, Calif., called Digital Reflections Inc. and was encouraging his friends and family to get in on the action. DRI’s prototype had a sleek exterior designed by Porsche and a cutting-edge display technology called liquid-crystal-on-silicon. At the company’s headquarters, the animated film Antz played on a loop on a 50-inch screen with eye-popping colors like nothing Thomas had seen before. In those days, a TV that size would cost tens of thousands of dollars, but Wayne Catlett, DRI’s chief executive officer, promised to deliver a model at a fraction of that price.
At 6 foot 7, Catlett was as slender as a fiber-optic cable, with movie-star good looks, dark eyebrows, and silver hair. In July 2001, as the boom was collapsing, he told Thomas they were in danger of losing everything. Venture capital had dried up, he said, and DRI desperately needed some new funding to survive.
Thomas had an idea. He mentioned a mining consultant he’d met at a construction site. The consultant, a salty fellow in his late 60s named Ken Conetto, had wowed Thomas with his knowledge of minerals and intrigued him with tales of Brazilian emeralds. Two of Conetto’s longtime contacts were Ribeiro and Saraiva.
It’s not clear when Catlett teamed up with Conetto against Thomas, but Catlett proposed that Thomas and Conetto go to Brazil to buy emeralds at cut-rate prices. As Thomas understood the plan, the gemstones would be appraised generously—he hoped for as much as $100 million—placed into safekeeping, and used as collateral for loans. The money from the loans would be deposited in what Catlett described as a high-yield investment program, supposedly facilitated by the International Chamber of Commerce (ICC). If Thomas had any doubts about the mechanics, they were eclipsed by thoughts of profit. After 47 weeks, the money was supposed to double, and they could pay back the loan and sell off the emeralds. Twenty-seven percent of the gross proceeds were to be invested in humanitarian projects, but the rest could be channeled back into DRI. Thomas would get a 10 percent consulting fee, but in the meantime he’d have to pay for their expenses and provide seed funding for the first emerald purchases.
In reality, the ICC was warning consumers that it did not vet investments and that con men were collecting $1.5 billion per year by promising outrageous returns through mysterious “prime banks.” Thomas knew none of this. “I believe in people and take them at their word,” he says. Catlett, who stood by the plan in court, didn’t respond to requests for interviews. “I had no knowledge of gems,” he testified in 2010. “This was completely outside of my area of expertise. But at that stage of the game, we were willing to try most anything.”
One steamy São Paulo morning in September 2001, Thomas, Conetto, Ribeiro, and Saraiva climbed into a van at their hotel and drove to a residential neighborhood. They pulled up to a house with a green tarp covering something in the carport; Conetto watched as a white cat peed on it. One of the Brazilians shooed away the cat and whipped off the tarp, revealing the 840-pound Bahia Emerald. Conetto chuckled as Thomas went bananas. Thomas took two dozen photos, then handed the camera to one of the Brazilian owners of the stone. He got down on one knee, reached around the emerald with his right hand, and cracked a big goofy grin.
Soon after, the Brazilians had Dimitri Paraskevopulos, a Turkish-born gemologist in his late 70s, deliver an appraisal. “Such a rare specimen has never been seen before,” he wrote, “not even at an international auction house such as Sotheby’s.” The gemologist mentioned the price of an emerald supposedly at the British Museum in London and said the Brazilian stone was superior. “I estimate is [sic] worth US$925 million,” he wrote. “As an expert gemologist, I must emphasize that this stone is a magnificent and rare find, worthy of admiration.” (Paraskevopulos did not respond to requests for comment.)
On Oct. 26, Catlett arrived in São Paulo to check on Thomas and Conetto. The atmosphere was festive inside the NH Della Volpe Hotel. Hors d’oeuvres and drinks were being served in the restaurant, where garimpeiros wandered around with folded pieces of paper filled with gemstones. It was the day before Thomas’s 38th birthday. A cake with the words Feliz Aniversario was brought on a silver platter over to the table where he sat across from the Brazilian owners of the Bahia Emerald. In photographs from the evening, Catlett, Conetto, and Thomas look like old friends.
Mesmerized by what he saw in Brazil, Thomas wired a total of $180,000 to his business partners by the end of November. He now says he thought he was buying the Bahia Emerald for himself for $60,000, and the Brazilians would ship it to him in California. That never happened, and Thomas has no bill of sale to prove his purchase. Catlett, Conetto, and the Brazilians would later argue in court that Thomas was simply paying their expenses as part of their failed investment scheme.
Over Christmas in 2001, Catlett penned a farewell message to Thomas and other DRI investors before declaring bankruptcy. “There has been a tremendous effort over the past five months to restructure and obtain funding for the company,” he wrote. He didn’t mention that some of DRI’s financial problems resulted from him fraudulently siphoning millions of dollars to a bank account in the Grand Caymans, according to a civil judgment in Santa Clara County Superior Court. Catlett has denied wrongdoing.
For the next three years the Bahia Emerald sat in a vault at the Bank of Brazil. Then, in 2004, Catlett, Conetto, Ribeiro, and Saraiva formed a company in Panama called Gemworks Mining. They shipped the emerald to San Jose, Calif.—declaring it a $100 rock on shipping forms—and recruited an ensemble cast, including convicted fraudsters, to rope in investors across California.
Gemworks made money through a variety of business ventures of varying complexity. In one case, they asked for a short-term loan to complete an emerald purchase and then strung along the lender for months before cutting off all contact, according to a review of their e-mails. Other times, they claimed a loan would be used to create highly lucrative emerald-backed securities. Shell corporations sprouted in Nevada. Jargon-filled contracts were illustrated with flowcharts that looked like blueprints for an integrated circuit. And they erased any doubts by flashing a handful of gemstones or a photo of the Bahia Emerald.
A chiropractor wired $40,000 to buy a promissory note linked to the Bahia Emerald—a judge called the scheme “despicable and reprehensible.” A wealthy real estate developer in Sacramento, Mark Downie, gave Conetto and Catlett an $81,000 loan to get another Bahia Emerald-backed investment scheme rolling. (Conetto says he didn’t know where the money came from and denies participating in any scam.)
According to Conetto, the Gemworks gang were constantly double-crossing one another and covertly moving the Bahia Emerald to make a quick buck. It bounced between a warehouse Conetto used in San Jose; the Santa Barbara office of Catlett’s lawyer, Eric Kitchen, who died in 2013; and a vault Catlett rented in a former federal bank in New Orleans, where it was threatened by the floodwaters of Hurricane Katrina. It became notorious among collectors of rare gems and minerals after Catlett signed ownership over to Larry Biegler. A real estate developer based in Paradise, Calif., Biegler was a big man with thinning dirty-blond hair and a cartoonishly nasal voice who claimed his wife was an heir to the Rockwell tool fortune. (She says she isn’t.) “He was a con man’s con man,” Conetto says. Biegler declined to comment.
Biegler enlisted Gary Weiss, a New York-based diamond dealer, to promote the Bahia Emerald; Weiss posted a listing for the stone on EBay in 2007, inventing an origin myth with riotous detail. According to the listing, the supervisor of the mine where the emerald was discovered needed eight men to heave it out of the ground and onto a jungle trail. They hauled it toward São Paulo until, five months into their journey, a pair of black panthers attacked the team’s mules. The men built “a stretcher from wood and vines” and “carried the rock by hand the rest of the way.”
With a starting bid of $18.9 million and a “Buy It Now” price of $75 million, the emerald never sold, nor did anyone really expect it to. At a minimum, the goal of the far-fetched tale was simply to pump up the price, according to Weiss. “That stone would be worth nothing if we didn’t romance it the way we romanced it,” he says.
On the afternoon of May 14, 2008, Emil Ayad stepped out of his office in East Los Angeles and watched a black van pull up to the cargo bay. Ayad managed a private vault for Commonwealth International, a boutique armored-transport company that provides more personalized service than Brink’s. The vault itself is a custom-forged steel box, 20 feet by 20 feet, where Commonwealth’s clients typically stored cash, artwork, and jewels.
Ayad had gotten a call that morning about a couple of guys who had a “stone” they wanted to deposit, and he imagined a tiny diamond that could be tucked into a safe deposit box. Now, he could see the idling van sagging on its suspension. As Conetto tells it, he sat in the passenger seat, while Biegler sat at the wheel.
Six employees hoisted the crate onto a jack and lowered it to the concrete floor. Ayad watched as an electric drill whirred away at dozens of screws. Finally, the side of the crate came off with a thump. Ayad stepped forward and gazed at the Bahia Emerald in awe. After seeing an appraisal valuing the emerald at $372 million, he increased the vault’s insurance coverage with Lloyd’s of London.
Ayad didn’t like a lot of movement in and out of the vault. Every time a client passes through the front door, he has to stamp his thumbprint next to his signature. But that summer, Biegler and a partner named Jerry Ferrara—who had a hoop earring and ran a Florida real estate company called Honest Father Buys Houses—treated the vault like a showroom, bringing in potential buyers of the Bahia Emerald on a moment’s notice.
One day, Ferrara brought by Kit Morrison, a dapper Mormon businessman with a trim goatee who lived in Idaho. According to court documents, Morrison wanted to buy some diamonds, and Biegler told him he had a shipment of them coming from South America. Biegler asked Morrison to wire him $1.3 million; Morrison would get a stake in the Bahia Emerald until the parcel arrived. As Morrison waited for Biegler to deliver the diamonds, Ferrara and Morrison would periodically drive to the Commonwealth vault to check on what Morrison called his pet rock. But as the weeks passed and no diamonds appeared, with excuses adding up, Ferrara says the situation grew heated.
In early July, Biegler called Ferrara to say he’d been kidnapped by the Brazilian mafia for 15 days. After his supposed release, he tried to pacify Morrison with three blue barrels of tiny emeralds, each barrel weighing 100 pounds. But the stones looked like something you might find on the bottom of a fish tank, or polished into beads on a cheap necklace. Morrison sold them all for $20,000 in New York. According to depositions and interviews with his business associates, that was barely enough to cover his expenses for a month of renting hotel rooms. Neither Morrison nor his lawyer responded to requests for an interview.
Morrison knew he’d been duped, and he decided to get even. He persuaded Ferrara to switch teams, and they set up a new corporation together, F & M Holdings. On Sept. 26 they arrived at the Commonwealth vault and, using Ferrara’s authorization, loaded the emerald into a black Cadillac Escalade with tinted windows and drove away. Ferrara says they had every right to do so. “I got possession, I got chain-of-title, we paid real money for it,” he says. “They’ve got nothing.” After leaving the vault, he e-mailed Biegler: “I guess the saying is true (there is no honor among thieves).”
In early October 2008, Biegler reported the emerald as stolen to the Los Angeles Sheriff’s Department. The case landed on the desk of two roving detectives in the county’s Organized Crime division, Scott Miller and Mark Gayman. Meeting at a Denny’s to discuss the case with a reporter, they look like they’ve gone deep undercover in Margaritaville. They wear wraparound sunglasses, baggy shorts, and oversize T-shirts to conceal their Berettas and beer bellies. The lawmen had a certain admiration for the Bahia Emerald crew. “These guys,” Gayman says, “could sell a snow cone to an Eskimo.”
For three days in December 2008, Miller and Gayman staked out Morrison’s home in the small town of Eagle, Idaho. Even though it was a week before Christmas, they weren’t prepared for the Idaho streets to be blanketed in snow. They were cold, and Morrison was nowhere to be seen. On the morning of the third day, Gayman knocked on the front door. Morrison’s wife, Suzanne, answered, looking flustered. She glanced outside and saw a line of police vehicles stretching down the street. “Do you know why we’re here?” Gayman asked.
“No,” she said.
“We’re here to get the Bahia Emerald.” Gayman told Suzanne Morrison that her husband was the prime suspect in the theft of the stone. After Gayman stepped inside, Suzanne got her husband on the speakerphone from Los Angeles. He refused to say where the emerald was, besides not in Idaho.
“If you don’t take us to the emerald, we’re going to put you in jail,” Gayman said.
“Take me to jail,” Morrison replied.
Outside, Gayman’s partner spotted a man fitting Morrison’s description walking around to the back of the house. Several officers tackled him in the snow. It turned out to be the cable guy.
By the afternoon, Morrison had cooled down and agreed to hand over the Bahia Emerald to the authorities, at least until its ownership could be resolved. Two days later, Miller and Gayman were leading a caravan of six vehicles, loaded with M4 and AR-15 assault rifles, from L.A. to Las Vegas, where, with a helicopter escort, they picked up the emerald at a storage facility. Whatever the rock’s true worth, the state of California was now a full participant in the legend of the Bahia Emerald. On their way back, Gayman and Miller gave Conetto a call to tell him that all 840 pounds were safely in the hands of the state. “Thank goodness,” Conetto said.
In January 2009, Conetto sued Morrison for ownership of the emerald. As the two parties were on the verge of a settlement, in which Conetto would pay Morrison $5 million, news coverage of the case led four other claimants to come out of the woodwork, saying in court they’d been swindled by either Conetto or Morrison.
After Tony Thomas saw the massive emerald on the evening news, he picked up the phone and gave Conetto a piece of his mind. “Ken, you never paid a dime in your life for nothing,” he told him in a conversation Thomas recorded in cooperation with the sheriff’s detectives. “You haven’t worked since I have known you. You haven’t worked a job. How did you pay for this stone, Ken?”
“You get your attorney, play your little game, take your best shot,” Conetto replied. “You’re going to get your d--- smacked in.”
Justice has creaked along at a geologic pace. One judge, John Kronstadt, found Conetto a sympathetic, if enigmatic, character. “His demeanor, tone, and pace of responses all led the Court to find his testimony very credible,” he wrote in one ruling.
After seeing a second judge reject his claim to the emerald in January 2014, Thomas has declared bankruptcy. Conetto, Catlett, Ribeiro, and Saraiva, working together, settled with Morrison for a percentage of the stone. They defeated in court the last holdout—Downie, the Sacramento developer—and prepared to sell the Bahia Emerald again. Conetto said last year that Morrison had a “sheik” lined up to buy it for millions.
But anyone who knew the history of the Bahia Emerald could have predicted that there would be no denouement. In September, Brazil sued to have the lawsuit in Los Angeles dismissed or halted while it “pursues federal and diplomatic efforts” to repatriate the stone, which it alleges was illegally mined and exported. “Instead of being in a museum in Brazil where it can be admired for its stunning size and other attributes, it is the subject of this action by a number of parties who claim they somehow own it,” Brazil’s lawyers wrote in a court filing. “They don’t. The Bahia Emerald is, and always has been, the property of Brazil.”
One afternoon last May, Conetto invited a reporter into his aquamarine trailer home in a pleasant part of South San Jose, where he’s lived with his elderly mother for more than 30 years. His TV is tuned to the Gem Shopping Network, and he has six La-Z-Boys lined up to help him develop business strategies. If he’s having trouble brainstorming in one chair, Conetto explains, he moves on to the next. “I’m a thinker,” he says.
By his estimate, he’s already earned more than $300,000 from his involvement with the Bahia Emerald. Now he just wants the whole ordeal to be over. “Everybody is a crook in this thing,” he says. The emerald was just “a pimple on a dog’s butt.” He digs through a stack of papers and pulls out a photograph of another large rock. “Just between you and me,” he says, “I have something four times bigger than the Bahia Emerald.”