Kalisch's lawyer, Max Folkenflik, argued that Kalisch's business plan was peppered with "red flags," including the fact that Kalisch had a silent partner who was a government employee.

Curiously, neither side called on the two people who would presumably know quite a bit about how much Maple Trade knew of the diamond scheme: Pablo Marino, a Maple Trade employee, and Victor Janovich, the man who brought Culver and Kalisch together. One more intriguing note: A significant number of Maple Trade files disappeared or were mistakenly thrown away.

Judge Peck, in the end, found in favor of Maple Trade, noting that the "ethically challenged" Kalisch's testimony about the diamond venture was credible, but his claims that Maple Trade knew the scheme was illegal were not credible. Maple Trade was focused on the collateral—the apartment—and "had no duty to inquire any further than it did."

Garimpeiros at work, photographed from a federal police helicopter in 2004.
Garimpeiros at work, photographed from a federal police helicopter in 2004.

"The only sound conclusion is that Marco finessed the subject, made incomplete, vague, and evasive disclosures and kept the truth to himself," Judge Peck wrote.

If anything, Kalisch was too good at smuggling—even his own business partners didn't know what he was up to. That, at least, was the conclusion of the court.

Meanwhile, the Kalisches tried a second strategy to hold on to the apartment: While Marco Kalisch may be liable for the debt, his wife, Mayra, was not. And she still had an ownership interest in the apartment. So, in a contorted legal maneuver, Mayra sued not only Maple Trade, but her husband as well. That tactic also failed.

The Maple Trade lawyers saw the litigation in part as a delaying tactic. The Kalisches were still banking $9,000 a month in rent from the 2 East 12th Street apartment, and they would continue to earn it as long as the court case went on.

In the years since the massacre, the clashes between the prospectors and the Indians have not abated. Nor has the government been able to come up with a system to mine the diamonds without controversy.

In 2006, Brazilian authorities suspended diamond exports for six months because of rampant smuggling and corruption, says Smillie, the PAC researcher who has written several reports on the issue. "They revamped their system, fired a lot of people, and arrested some, but just how good the controls are is unknown," he says. "One of their solutions was to have the prospectors register online, but a lot of them are illiterate and don't have computers."

Venezuela, PAC reported, declined in 2007 to comply with the Kimberley certification process. The PAC reported that Venezuelan diamonds were being openly mined and smuggled into Guyana and Brazil, even though the government claimed not to have exported any diamonds.

In December 2007, Cinta Larga Indians took a United Nations human rights official and three other people hostage to once again demand better government services and that the government expel miners from their lands. The hostages were held for four days and released.

Blore, the journalist, says federal police are stationed on roads leading to the reserve: Mining continues, but on a smaller level. "Miners bring in supplies after dark, and have trails through the bush to bring out the diamonds," he says.

A bill currently winding its way through Brazilian Congress would sell licenses to mining companies to exploit the diamond reserves. In exchange, the tribe would receive a small payment. The Indians oppose this bill, Blore says. "More militant tribes have given notice that the bill is a formula for violence and conflict, but Brazil is still very much an elitist government-knows-best kind of place," he says. "Actual discussions with actual stakeholders are not something the government knows how to do."

As for Kalisch's former partners, arrested in the 2004 raids—well, the Brazilian justice system seems to move extremely slowly.

An article in the magazine Carta Capital reported in mid-2008 that Glikas was assisting the federal police in its investigation. Cassol, the governor of Rondônia, was being probed for vote buying and illegal diamond trafficking. Blore says an indictment is unlikely because the supreme court has never convicted a sitting politician of corruption.

Last year, Mayra Kalisch took one last shot at preventing Maple Trade from selling the apartment at auction. Having lost in federal bankruptcy court, she appealed to civil court and U.S. District Judge Kevin Castel.

Her lawyer, David Wander, argued that Maple Trade knew about the illegal nature of the business, and shouldn't profit from those acts. Doing so, he wrote, would "contradict established precedents by the Supreme Court and over 100 years of jurisprudence of the New York State courts."

Maple Trade's lawyers, Mark Frankel and Tom Berry, argued that Maple Trade was simply unaware of the illegality of the venture. The Kalisches, they claimed, just didn't want to part with the apartment: "This is the latest chapter of the Kalisches' four-year effort to avoid the consequences of Mr. Kalisch's loss of the money he borrowed from Maple."

But Wander retorted that Maple Trade's claim that they weren't aware of the illegality of the venture was "not based in reality": "What legitimate business would secretly hire a government official to transport $400,000 worth of diamonds from an Indian reservation to an airport?" he wondered.

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