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Lazare Kaplan Anticipates a 23% Drop in Revenue

Aug 30, 2012 2:47 PM   By Jeff Miller
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RAPAPORT... Lazare Kaplan International  anticipates that its fiscal 2012 revenue will reflect a 23 percent year-on-year decline at $105.7 million for the 12 months that ended on May 31. The decrease in  sales primarily reflected a drop in rough trading volume, according to the company's statement to the Securities and Exchange Commission (SEC). Uncertain economic conditions continue to impact  the diamond and jewelry industry, according to the group.

In addition, Lazare Kaplan stated that legal proceedings with Antwerp Diamond Bank and KBC Bank are continuing and, thus, these issues have extended the  material uncertainties the company is attempting to resolve. As it has done now since 2009, Lazare Kaplan filed a notice with the SEC that its fiscal results would be late. The company has been unable to finalize its full year and quarterly financial statements for 2012, 2011, 2010 and 2009 due to alleged material uncertainties,  most of which have been resolved in the past year.

But Lazare Kaplan noted that one unresolved issue dates back to March 2010 when Antwerp Diamond Bank commenced litigation against the firm for a $45 million credit facility. Lazare Kaplan denies that it owes any amount to that bank. Belgian proceedings, originally scheduled to be heard on October 7, 2011 and rescheduled for September 28, 2012, are currently scheduled to begin on March 22, 2013, subject to the final approval of the Belgian court.

On December 23, 2011, Lazare Kaplan filed suit against Antwerp Diamond Bank and KBC Bank under  the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law and is seeking, among other things, in excess of $500 million in damages that could be paid under RICO. The lawsuit alleged that the banks engaged in money laundering and other illegal activity that includes the theft of more than  $135 million from the sale of diamonds belonging to Lazare Kaplan and its affiliates.

Both banks have offices in New York and conduct licensed banking operations in the United States. The diamond firm  filed the RICO lawsuit  in an effort to resolve the latter final material uncertainty. The banks sought motions to dismiss Lazare Kaplan's suit in April and a decision is expected soon. 

Lazare Kaplan also stated that company director Lucien Burstein passed away on August 12 after having served the firm since 1984. Burstein was on the audit and compensation committees of the board of directors, as well as its secretary and corporate counsel.

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Tags: Antwerp, bank, diamond, Jeff Miller, Lazare kaplan, litigation
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