As Radar previously reported, Jayne is in the middle of a nasty battle over a pair of diamond earrings worth $1.4 million. Her estranged husband purchased the set in 2007 for $750k and the jewelry’s value has increased over time.
In 2020, Girardi and his law firm Girardi Keese were both forced into bankruptcy by creditors who claimed they were owed millions. Court records revealed over $500 million in claims filed in the firm’s case.
The federal judge presiding over the bankruptcy appointed a trustee to take over control of Girardi’s finances. Recently, the trustee demanded Jayne hand over the diamond earrings — claiming Girardi bought them using his client’s money.
Specifically, the money Girardi used came was supposed to be “settlement proceeds” for a group of people who “suffered serious health issues from their use of the drug Rezulin.”
The trustee’s plan is to sell off the earrings to the highest bidder and to use the proceeds to pay creditors.
Jayne objected to the request as RadarOnline.com first reported. “During our marriage, I believed [Tom Girardi] and [his firm] were financially successful, extremely wealthy, and made large amounts of money,” she said. Her lawyer argued the statute of limitations had run out on the claims brought forth by the trustee.
The RHOBH star also revealed the California Franchise Tax Board (FTB) recently informed her she owes $2.2 million for 2019. She admitted in court documents, “I do not have the ability to pay the FTP tax bill. I also do not know if the FTB is claiming any sort of lien on my assets, which include the diamond earrings.”
The earrings are currently in a safety deposit box where they will stay until the outcome of the case. Jayne’s lawyer demanded the jewelry not be sold off at auction and be returned to Jayne.
Now, the trustee has fired back at Jayne’s attempt to keep the earrings. They said the reality star should not be allowed to “keep the fruits of her husband’s poisonous tree because of the time that has passed since the crime occurred.”
The trustee said Jayne admitted in her declaration that she first learned of her husband’s embezzlement when the issue surfaced in this case — November 2021.
“At that time, [Jayne] had an obligation to return the earrings to the Trustee. She did not, and the Trustee was compelled to file her Motion. [Jayne’s] response, because of the passage of time, she gets to keep the fruit of the embezzlement. Not so,” the filing argued.
The trustee then cited Penal Code §496(a) which states, “every person who withholds any property from the owner . . . knowing the property to be stolen.. . . shall be punished by imprisonment in a county jail for not more than one year, or imprisonment pursuant to subdivision (h) of Section 1170.”
“Her conduct appears to be a new crime,” the trustee wrote. “Her refusal to now turn over the Diamond Earrings is conversion, for which she can be held accountable in damages. She can also be civilly liable for the value of the Diamond Earrings, plus statutory interest and punitive damages, which with prejudgment interest could easily be $5.4 million.”
The potential $5.4 million was broken down as $10% per annum on the $750k principal which translates to $75k per year for 15 years, or $1,125,000 for a total of $1,875,000. The trustee said they could also seek punitive damages of $3.6 million for a grand total of $5.4 million.
[Jayne] makes much of the fifteen years that passed since Girardi helped himself to $750,000 from the Rezulin Client Trust Account so that she could have sparkling earlobes,” the trustee wrote. “But not once did she argue or present evidence that the beneficiaries of the Trust, the clients who were deprived of funds needed to pay for their special needs from the damages sustained from taking the drug, had any inkling of the embezzlement that took place.”
Jayne's lawyer tells Radar, "The trustee for Girardi Keese (GK) stands in the shoes of the law firm, and inherits GK’s knowledge of the transaction in 2007, which involved a check written by two GK partners. The clock began to run in 2007 and all statutes of limitation have expired. The “new crime” allegation is meritless."
He added, "As the GK trustee knows, Erika offered to put the earrings in an escrow pending a final judicial resolution. And guess what? The GK trustee took us up on that offer and the earrings are in a safe deposit box to which the GK trustee has the key, pending a final decision. Not exactly a new crime."
"Once again, everyone piles on Erika, this time for actions of her ex-husband of 15 years ago about which she had no knowledge whatsoever. Why aren’t the trustees going after Tom Girardi or the estate of Mr. O’Callahan, the other GK partner who signed the check in 2007? Putting the blame on Erika, an entertainer without a law degree who never worked at the law firm, is a diversion tactic. Why not focus on all the attorneys, accountants, and funders who were closer to TG and GK’s inside operations?" he asked.