in, Esmerian decided it was time to establish a presence on Rodeo Drive in Beverly Hills. The shop opened last September but, as he said, "That was in the good old cowboy days when all this was fun." The name of the man he hired to run his retail empire should have sounded an alarm: it was Peter Bacanovic, the star-stroking Merrill Lynch broker who went to jail with his friend Martha Stewart for diddling the stock market. Even Merrill Lynch raised an eyebrow at that.

Shortly after his shop opened, the 'sub-prime' credit crunch began to take its terrible toll, and sales of top-end jewels tumbled. Esmerian could no longer make his $1.5m monthly payments and had to take back his Folk Art masterpieces from museums, and sell them. With Merrill Lynch doing even worse

- it lost $30bn dollars on dodgy loans and fired 2,900 employees - Esmerian discovered that the smiles of Wall Street turn crocodile when debts go bad. They called in the jewels.

Problems came to a head when Merrill Lynch tried to cash in the jewels at a Christie's auction in New York. "It's a fire sale presentation!" complained Esmerian. "These are pieces that deserve respect. It's like a magnificent Fifth Avenue Mansion being offered for the price of a Third Avenue condo."

Old money is snobbish, new money ruthless. But ruthless wins. The only way Esmerian could avoid the indignity of his family jewels going on the block was by declaring bankruptcy. So now a judge will decide who gets the diamonds and who gets the gold.