Frisco jeweler catches attention of feds who seized his assets due to cash transactions

Small businesses owners like jewelers have to be careful about certain cash transactions. Some of their customers could be drug dealers trying to launder illegal proceeds.

If they don’t keep good records and report suspicious activity, the feds could come after them.

That’s the situation self-described “celebrity jeweler” Zameer Lokhandwala finds himself in. The Frisco man is in the process of trying to justify certain sales transactions to satisfy the government that he’s not in cahoots with drug dealers.

Federal agents raided Lokhandwala’s home in June and seized almost $1 million as well as numerous pieces of expensive jewelry, gold bars and two vehicles, court records show.

Lokhandwala, who has posed online for photos with customers who include current and former Dallas Mavericks and Dallas Cowboys as well as rappers, has hired veteran white-collar defense lawyers. They say they are cooperating with prosecutors and trying to make the case that innocent mistakes, not criminal intent, were at issue.

Lokhandwala, 46, has not been charged with a crime, but the investigation continues. His wife is a co-owner of Marc Samuels Jewelers, which has locations in Frisco and Grapevine, corporate records show. The store has been in business for about a decade.

The government filed a forfeiture lawsuit against his seized property on Dec. 17, in an attempt to keep more than $902,000 taken from him in cash and from bank accounts. The government has become increasingly aggressive in going after property in civil forfeiture actions as part of its efforts to crack down on money laundering.

The burden of proof in civil forfeiture cases is less than in criminal actions where prosecutors must prove guilt beyond a reasonable doubt. As a result, many defendants relinquish their property rather than fight the costly forfeiture lawsuits, or they give up after running out of money to defend them. Some are never charged criminally.

Fighting a civil forfeiture case also can expose a property owner to criminal liability. These scenarios have prompted critics to accuse the government of using heavy-handed tactics to take property from people never formally accused of a crime.

Tom Pappas, one of Lokhandwala’s attorneys, said the government is scrutinizing his client’s business and that he is in the process of reviewing his client’s sales transactions. The forfeiture lawsuit does not explain how Lokhandwala is suspected of wrongdoing. A DEA affidavit that is part of the case is sealed.

“We’re attempting to work things out with the government,” Pappas said. “These kinds of allegations are common in the kind of business Mr. Lokhandwala is in. We’re working in good faith to get them resolved.”

A Plano-based government lawyer said in the forfeiture lawsuit that in July 2019 law enforcement began investigating an alleged drug trafficking organization that is based in Mexico and North Texas. Assistant U.S. Attorney J. Kevin McClendon wrote in the lawsuit that law enforcement identified Lokhandwala in August 2019 as a money launderer for the organization, saying he “received deliveries of multi-thousands in drug proceeds.”

Money laundering involves concealing the source of criminal proceeds by making it appear legitimate. One way of doing that is to use cash to buy luxury goods or real estate. The Bank Secrecy Act, passed in 1970 to detect money laundering, requires banks to report cash purchases over $10,000 to the IRS as well as suspicious financial activity that might signify money laundering or other crimes.

To avoid such reporting, criminals often make multiple purchases below the $10,000 threshold, which is known as “structuring” and is also illegal. Business owners who deal in expensive products like jewelry and vehicles and who aren’t aware of this particular aspect of the law can end up triggering an IRS investigation and lose their property and even their freedom.

Pappas said Lokhandwala’s business involves a large volume of jewelry transactions. Even if you keep very careful records, it’s difficult to satisfy all of the law’s requirements, he said. Sometimes a customer will ask to make payments on an expensive purchase, he said.

“Bankers are taught to be suspicious of that. They take classes,” Pappas said. “They don’t do that for jewelers.”

Unsuspecting merchants with growing businesses can easily run afoul of the law, he said.

But in other cases, authorities have used informants to prove to juries that business owners knew they were accepting drug money. Such was the case with Richard Arledge, who is serving 15 years in federal prison.

The former owner and operator of Richard Arledge Suzuki in Hickory Creek was convicted in 2010 of conspiracy to commit money laundering after accepting bags of cash from drug dealers and other criminals in exchange for luxury cars, authorities said. In some cases, up to $48,000 in cash was given as part of a car sale.

Former employees and customers testified against Arledge, 65, during the trial. The McKinney man promised his customers that the illegal transactions wouldn’t be reported. He also titled the vehicles under the names of third parties and mislabeled the car deals as “leases” in order to re-acquire the vehicles — which included Maseratis, Aston Martins and Bentleys — if they were seized by the feds, prosecutors said. Thirteen other defendants, including ex-dealership employees and customers, pleaded guilty in the case.

But business owners who are not prosecuted for money laundering can still face prison time for violating the law.

A Pittsburgh jeweler, for example, was sentenced to probation after pleading guilty in 2014 to a charge of failing to file a report of currency received by a non-financial business.

Alan Kashi, 32, of Kashi Jewelers, failed to file a report to the IRS after receiving about $12,500 in cash for a Breitling watch, federal prosecutors said. A related civil forfeiture lawsuit alleged that Kashi Jewelers “conducted financial transactions involving the proceeds of drug trafficking.” He had faced up to five years in prison.

Kashi and his family members agreed to forfeit more than $933,000 to the government as part of the case, prosecutors said.