Sotheby's may be liable for $4million for missing diamonds after being accused of giving them to a ‘stranger’

Washington, United States

A state appellate court in New York has ruled that Sotheby’s may be responsible for $4 million for missing diamonds after the auction house was accused of giving them to ‘a stranger’ in a lawsuit. The diamonds were allegedly handed to Sotheby’s for appraisal in April 2019, and M&L Financial was exploring a future consignment, as per the lawsuit filed by M&L Financial. A few months later, M&L said that Sotheby’s allegedly informed the business that it had given the diamonds to a representative of the organisation that loans the gems from M&L as collateral. Since then, the jewels have vanished, CNN reported.

The diamonds had been owned by Jona Rechnitz, a well-known political fundraiser in New York and Hollywood, who operates Jadelle Jewelry and Diamonds of Beverly Hills. As per the lawsuit, Rechnitz delivered the stones to M&L because he owed the company a huge debt. Furthermore, Sotheby’s said that Rechnitz informed the auctioneer that an agent was coming to collect the diamonds. The agent then arrived at Sotheby’s to take up the jewelry. 

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In 2020, a lawsuit was filed by M&L against Sotheby’s, claiming that the diamonds shouldn’t have been given to a representative. The business also claimed that Rechnitz had recommended Sotheby’s and later found that Rechnitz was friends with Quin Bruning, the auctioneer’s jewellery specialist. 

Initially, a lower court determined that Sotheby’s was right to give the items to a representative since Jadelle was mentioned as a co-consignor along with M&L Financial on the contract. However, the California Court of Appeals dissented on July 14 and allowed M&L to proceed with the breach of contract lawsuit against Sotheby’s.

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M&L claimed that after vocally objecting to the incorrect wording and insisting that only financial business (M&L Financial) be included and not executive Bruning in the Consignor’s name, Sotheby’s still signed the contract. However, the latter denies that any such matter was brought up.

The Court of California Appeals said that “There was no agreement yet that Sotheby's definitely would auction the diamonds for M&L, but a potential auction was the point of Sotheby's involvement. Sotheby's breached this agreement by giving the diamonds to [a] stranger,” CNN reported.

However, Sotheby’s in a statement said, “regards the allegations in the complaint as baseless and riddled with untruths and mischaracterizations. We will continue to vigorously defend this in court."

(With inputs from agencies)

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