Midtown Pawn Shop Sued By Ex-Billionaire Over Diamond Ring Loan

MIDTOWN MANHATTAN, NY — A fancy pawn shop in the Diamond District is being sued by a troubled billionaire businessman who says it unfairly pocketed his expensive diamond ring.

Philip Falcone, founder of the hedge fund Harbinger Capital, filed the suit Tuesday in Manhattan Supreme Court against New York Loan Company, a self-described "high-end pawn shop" based in the International Gem Tower on West 47th Street.

Falcone, who amassed much of his fortune following the 2008 financial crash, has in recent years faced personal money woes: he was fined $18 million by the Securities and Exchange Commission for alleged improprieties, and earlier this year appeared to lose his mansions on the Upper East Side and the Hamptons to forclosure.

Amid those worries, Falcone entered into a contract with the pawn shop in April 2019, offering up his ring: an emerald-cut, 20.45-carat, single-diamond ring worth about $6.3 million, which he had purchased from Harry Winston jewelers on Fifth Avenue in 2007.

With the ring as collateral, Falcone received a $600,000 loan from the shop and signed a contract requiring him to pay it back by Aug. 24 — or else lose the ring.

Apparently unable to make the payment, Falcone managed to win three contract extensions, the last of which he signed on Nov. 9, 2020. But while that document was titled "4 Month Loan Contract," its listed due date was only 15 days later — on Nov. 24, he contends in the lawsuit. It also included an 18 percent interest rate, raising his debt to $708,010.

"The redemption schedule provided in the November 2020 Loan Contract deprived Falcone of any reasonable opportunity to redeem the Diamond Ring collateral," Falcone's suit says.

By February 2021, New York Loan Company declared Falcone in default and seized the diamond ring, he says. At some point later, the ring was sold to an unknown buyer.

Falcone is asking a judge to force the pawn shop to return his ring or else pay him damages, arguing that the contract violated a state law requiring pawn shops to wait four months before selling an item.

New York Loan Company did not immediately respond to a request for comment.

Kathleen Culliton contributed reporting.