Mastros, free from French extradition, want their big diamonds back

SEATTLE -- The biggest personal bankruptcy case in the Seattle area is all but over now as French authorities have decided not to extradite Bellevue couple Michael and Linda Mastro.

Before being forced into bankruptcy in 2009 and fleeing the U.S. for France, Michael Mastro was one of the most successful real estate developers in the Seattle area. Now he owes more than $200 million to creditors, who are expected to receive just pennies on the dollar.

A bankruptcy judge had ordered the couple to turn over two large diamonds -- 43 carats combined! - to pay their creditors. Instead, the FBI said they took them on the run.

The Mastros were later arrested in October in the French town of Annecy and the two diamonds were part of a $3 million in jewelry seized.

But now that the Mastros won't face extradition, the couple wants the diamonds back.

Federal bankruptcy trustee James Rigby says it's one more example of how the Mastros hid assets and allegedly committed bankruptcy fraud.

"They didn't tell us about the jewelry -- we had to go find them," Rigby said.

In a statement released Monday, the Mastros detailed why they fled the United States: "In this case, the key word is panic. We feel sorry about what happened, but most of the loss - if not all of it - has been caused by panic."

Jim Frush, Mastro's criminal defense attorney, says the panic started when the banks put them into bankruptcy.

Frush said the bankruptcy forced the auction of Michael Mastro's personal assets -- including his home -- but prevented the long-term Bellevue developer from salvaging many millions more from his business, leaving creditors much worse off.

Rigby disagrees, saying the Mastros did everything they could to hide assets.

"They lost and they walked away with a couple hundred million dollars of other people's money," Rigby said.

The Mastros' statement reiterated they were not fugitives.

"We just tried to take a step back to breathe and think," the statement read.

And now that they are safe in France? They add: "We never considered to defraud anyone. We did not sell the rings and will now be legally applying to get them back."

Investors in Mastro's development business lost hundreds of millions of dollars and to date, the bankruptcy has only managed to salvage about one percent for creditors. The last step in this case will now be what happens to that $3 million in jewelry, including those two gigantic diamond rings.