A Midtown diamond dealer was indicted yesterday in Brooklyn federal court on charges that he ran a remarkable, multi-million dollar diamond-buying Ponzi scheme – bilking investors month after month until he’d borrowed and lost more than $34 million.
When he was caught, authorities said, he tried unsuccessfully to kill himself.
Larry Kar, 43, a diamond district merchant who lives in Borough Park, Brooklyn, faces up to 70 years in prison and tens of millions of dollars in fines.
Prosecutors say that between January 2000 and July 2001, Kar borrowed millions from five high-powered investment groups, claiming he was using the money to buy rough, uncut diamonds from a Turkish shipping company, cutting them, and selling them to merchants in Thailand.
The victims were “extremely sophisticated investors, including individuals who manage massive investment funds, attorneys and experienced, high-level real estate investigators,” according to court papers.
When Kar was caught, according to authorities, he admitted to investors that he had made up fake financial documents “out of thin air” because he’d apparently been buying diamonds on Asia’s black market.
After borrowing $34 million from investors, Kar’s alleged Ponzi scheme collapsed, prosecutors said.
He allegedly admitted to investors on wiretaps that “there was nothing left . . . i.e., no money, no diamonds.”
“He was purchasing diamonds, not from a Turkish shipping company . . . but rather ‘from . . . people in an unofficial way, so to speak.'”
Prosecutors still have no idea where all the money went.
“Where these funds went . . . remains a complete mystery,” wrote Assistant U.S. Attorney Eric Tischwell in a letter to federal judge Robert Levy.
Kar also allegedly confessed to investors on wiretaps that when the scheme collapsed, he contemplated either fleeing or committing suicide.
Neither Kar, who is jailed awaiting arraignment next week, nor his attorney could be reached for comment.