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Originally published Tuesday, February 19, 2013 at 11:07 AM

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Linda Mastro loses appeal on diamond rings worth $1.4 million

A federal judge has dismissed Linda Mastro’s appeal of a bankruptcy court’s ruling that two giant diamond rings belong to her husband’s many creditors, ruling she waived her right to appeal when she and her husband fled the country.

Seattle Times business reporter

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She had the opportunity to DO THE RIGHT THING.....now she can wail her tale of woe to... MORE
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A federal judge has dismissed Linda Mastro’s appeal of a bankruptcy court’s ruling that two giant diamond rings belong to her husband’s numerous creditors.

Linda Mastro lost her right to appeal when she and her husband, former Seattle real-estate magnate Michael Mastro, fled the country in 2011 after they were ordered to turn over the rings, U.S. District Judge Barbara Rothstein said in an order this weekend.

Linda Mastro has maintained the rings, sporting diamonds of 27.8 and 15.93 carats, are not community property but belong to her alone.

The two pieces have been valued at $1.4 million and have played a prominent role in Michael Mastro’s long-running bankruptcy case.

U.S. Bankruptcy Judge Marc Barreca ordered the Mastros to surrender the rings in June 2011 while he decided their ownership. They did not comply, and later fled the country.

In their absence, Barreca ruled in November 2011 that the rings belong to Michael Mastro’s creditors. His wife’s lawyer appealed.

The rings were recovered when the Mastros were arrested in France last October, and now are in the custody of the FBI in Seattle. The Mastros have been indicted by a federal grand jury on 43 counts of bankruptcy fraud and money laundering.

Ten counts involve the rings. The Mastros remain in France, where they are fighting extradition.

In her order, Rothstein wrote that “by fleeing the jurisdiction of the United States, Linda Mastro has waived her right to pursue this appeal. ... Such blatant disregard for the authority of the judicial system renders her ineligible to pursue an appeal from the orders she is flouting.”

Linda Mastro’s lawyer, Michael Gossler, said his client hasn’t decided whether to appeal Rothstein’s ruling to the Ninth Circuit Court of Appeals.

Rothstein also dismissed Linda Mastro’s appeal of judgments against her totaling more than $1.3 million.

Michael Mastro was a prolific Seattle real-estate developer and lender for 40 years until the crash undermined his empire and he was pushed into bankruptcy in July 2009.

His debts to unsecured creditors have been estimated at $250 million; so far those creditors have recovered just a penny on the dollar.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

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