In 2005, Esmerian, 69, attempted to expand his company through a series of loans – including $177 million from Merrill Lynch and $40 million from Acorn Capital Group.

The feds claim he secured different loans with the same jewelry and then sold some of it, including a $10 million butterfly brooch.

Later, in 2008, the company declared bankruptcy. Esmerian allegedly embezzled property from Fred Leighton, sold it and kept the money for himself, sources said.

He stands accused of lying about the location of millions of dollars of missing collateral. Some of the fraud was discovered by Merrill Lynch, and some was discovered during the bankruptcy proceedings.