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RAPAPORT... Lazare Kaplan International estimated that revenue fell 31.9 percent year on year to $9.8 million in the third quarter that ended on February 28 and that diamond sales declined 33.8 percent to $9.2 million, while revenue from other activity rose about 20 percent to $600,000. The company informed the Securities & Exchange Commission that its financial report would be late, citing the continued inability to "resolve material uncertainties pertaining to the recovery of certain assets and the potential obligations under lines of credit," so the latter figures are company estimates.
Lazare Kaplan noted that uncertain economic conditions continue to impact the diamond and jewelry industry. In addition, rough diamond prices have generally been rising, while polished diamond prices have experienced declines in various categories, placing significant pressure on diamond manufacturers. The firm's ongoing litigation with Antwerp Diamond Bank N.V. and KBC Bank N.V. and the inability to resolve the material uncertainties have adversely impacted the company's ability to transact business.
Lazare Kaplan reiterated its intention to file official quarterly and annual financial reports dating back to May 31, 2009. Lazare Kaplan denies that any amount is currently due or owed to Antwerp Diamond Bank under a $45 million facility and further denies that any action under that agreement be brought by the bank in the courts of Belgium. In the U.S. court system, Lazare Kaplan is seeking, among other things, in excess of $500 million in damages that could be trebled under the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law against the banks. The company alleges that the banks engaged in money laundering and other illegal activity that includes the theft of over $135 million from the sales of diamonds belonging to Lazare Kaplan and its affiliates.
On February 12, the Antwerp Court of Commerce deferred scheduling hearings with respect to the Antwerp Civil Litigation against the financial institutions, in light of an appeal filed by Lazare Kaplan of a prior ruling by the Antwerp Court of Commerce. The Antwerp Court of Appeals has scheduled hearings on the appeal filed by Lazare Kaplan for September 26, 2016. Accordingly, the disposition of the Antwerp Civil Litigation is not expected until such date. The company's criminal proceedings against Antwerp Diamond Bank and KBC Bank are still pending appeals and/or discovery in Antwerp for fraud, embezzlement and money laundering and in the U.S. under RICO and state law.
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