Diamond Dealers Convicted of Faking New York City Heist

Two diamond dealers were convicted Friday of staging an elaborate, phony heist in hopes of netting millions of dollars in insurance money to save their struggling business.

The New Year’s Eve 2008 incident had cinematic trappings: costumed bandits dressed as Hasidic Jews, wearing fake beards and brandishing realistic-looking toy guns as they seemingly emptied gems out of a safe.

But the real-life footage _ captured on a recording device that prosecutors said the dealers tried unsuccessfully to cripple with drain cleaner _ made it “clear to me that this is a conspiracy,” said Manhattan state Supreme Justice Thomas Farber. The jewel dealers, Mahaveer Kankariya and Atul Shah, opted not to have a jury.

Shah, 49, held his hand to his face and appeared to wipe away tears after he and Kankariya, 44, were convicted of insurance fraud and other charges in what they said was a real robbery.

The men face at least a year and as many as 25 years in prison at their sentencing, set for April 29.

“They’re, obviously, distressed by the verdict,” said Shah’s lawyer, Benjamin Brafman, adding that he planned to assess potential appeal options. Kankariya’s lawyer, Michael Bachner, had no immediate comment.

Manhattan District Attorney Cyrus R. Vance Jr. called the episode “a desperate gamble” by two men trying to con their way out of financial trouble.

Kankariya’s company, Real Creations, dealt in jewelry; Shah’s business, Dialite Imports, bought and sold loose diamonds. They shared offices in Manhattan’s Diamond District.

The men told police that two thieves, disguised as Hasidic Jews, forced Shah at gunpoint to open the safe and took $9 million in jewels from Dialite and Real Creations. Police found plastic ties, duct tape and disarray when they arrived.

But insurers and authorities became suspicious as it emerged that the businesses were in hundreds of thousands of dollars in debt.

Ultimately, the security camera told what prosecutors cast as a damning tale: Shah and Kankariya had replaced many of the jewels in the safe with empty boxes just hours before the supposed hold-up.

And the heist itself at times “frankly, looks like a joke,” Farber said. The supposed stick-up artists sometimes put the boxes they’d just grabbed back in the safe and mishandled the plastic ties they used to restrain Shah and an employee, he noted.

Drain cleaner was poured on the cameras’ recording system and eventually disabled it, prosecutors said, but the images survived.

The jewel dealers’ lawyers said the men were truly robbed, and the case was fueled by their insurer’s reluctance to pay the claim. The dealers often moved jewels in and out of the safe, and they were guilty of nothing more than misremembering in denying they’d removed many gems from the safe before the incident, the lawyers said.

Farber called it “not conceivable” that anyone would forget that.

Shah and Kankariya remain free on $750,000 bond until their sentencing, but Farber added a requirement Friday for them to wear ankle monitors tracking their location.

Another jewelry dealer, Edward Fried, was arrested last year on accusations that he acted as one of the costumed robbers, but the case against him was dismissed. No other suspects have been charged.