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Published: Friday, 12/10/2004

822 diamonds seized from Frankel fetch nearly $9M at federal auction


NEW YORK - A cache of 822 diamonds seized from fugitive financier Martin Frankel sold for nearly $9 million during an auction intended to provide restitution to the victims of his schemes, officials said yesterday.

Hundreds of bidders ranging from retailers to suitors seeking a deal on an engagement ring gathered at the Jacob K. Javits Convention Center for the two-day diamond auction - the largest ever held by the U.S. Treasury Department.

The biggest gem on sale, a 15.67-carat round brilliant diamond as big as a nickel, sold for $297,500 to an Internet bidder. The other diamonds were mainly loose gems, with a few rings and one pair of earrings.

Shaun Haacke of San Jose, Calif., said he paid $3,400 for a 0.85-carat diamond to give to his fiancee. "That's a thousand less than I was willing to pay," he said. "As soon as it's set, I'll propose."

Prosecutors said Frankel looted more than $200 million from insurance companies that mostly sold funeral policies to the poor. He was arrested in Germany after disappearing from his Connecticut mansion in 1999, triggering an international manhunt.

Frankel, 50, pleaded guilty to fraud and racketeering in 2002 and will be sentenced today in New Haven, Conn.

His attorney, Bill Koch, said he will seek a reduced sentence based on Frankel's mental state and the harsh prison conditions he suffered in Germany. Frankel, who is Jewish, was housed in the same prison where Jews were executed during World War II, Mr. Koch said.

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