Fugitive Seattle real-estate magnate Michael R. Mastro and his wife, Linda, have been arrested in France after 16 months on the lam.
Details were not immediately available, but the U.S. Attorney’s Office in Seattle confirmed the arrests in a statement Wednesday afternoon.
The office also unsealed a criminal complaint filed against the Mastros in August 2011, charging them with six counts of bankruptcy fraud.
James Frush, Michael Mastro’s Seattle attorney, said he learned of the arrests Wednesday morning. The couple are in the custody of French authorities, he said.
Another attorney with knowledge of the case said the Mastros were arrested at Lake Annecy, in the French Alps.
Frush said he hasn’t yet seen the criminal charges. He also said he doesn’t know whether Mastro will fight extradition.
The Mastros disappeared in June 2011, days after the judge in Michael Mastro’s massive bankruptcy case ordered the couple to turn over two giant diamond rings valued at $1.4 million.
They officially became fugitives a month later when warrants were signed for their arrest. But those warrants were for contempt of court, a civil violation, and experts said it would be difficult to extradite the Mastros without a criminal charge.
Documents unsealed Wednesday indicate there also has been a warrant for their arrest for more than a year on the bankruptcy fraud charge.
The complaint alleges that, after entering bankruptcy, the Mastros failed to disclose a bank account to the court, then used the account over the next eight months to write checks for about $285,000 in personal expenses.
The Mastros also didn’t disclose the account on several occasions under oath or penalty of perjury, the complaint says.
Checks were written for American Express payments, loan payments on the couple’s Bentley and Rolls-Royce, the purchase of $100,000 in gold, and purchases from department stores, including Macy’s, Barney’s and Nordstrom, according to the complaint.
Michael Mastro also used the account to write checks to his wife totaling about $18,000, the complaint says.
Michael Mastro, now 87, was a longtime and prolific real-estate developer and lender whose website alluded to his “billion-dollar career.” But his highly leveraged empire, which included Tacoma-based developers Tom Price and Hyun Um of Prium Cos., fell apart when the market tanked. Price and Um have been in bankruptcy for more than two years.
Three lenders pushed Mastro into bankruptcy in 2009. The most recent estimate of his debt to unsecured creditors is $250 million, and court-appointed trustee James Rigby has said those creditors will be lucky to get back more than a few pennies on the dollar.
Federal authorities began a criminal investigation of Mastro nearly three years ago.
Rigby said Wednesday that he was pleased to learn of the arrests. He has maintained for years that Mastro has hidden assets that should go to his creditors — allegations Frush has denied.
If the Mastros bring back the diamonds, that would be even better news, Rigby added. A bankruptcy judge ruled after the Mastros’ disappearance that the jewels rightfully belong to creditors.
Emily Langlie, spokeswoman for the U.S. Attorney’s Office, said the Mastros could be extradited from France, or deported, or return voluntarily. The path that’s followed could hinge on their legal status in France, she said, and that’s still under investigation.
A grand jury still must indict the Mastros for the bankruptcy-fraud charges against them to go to trial, Langlie said.
Staff writer Kathleen Cooper contributed to this report.
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