Former Graff franchise partner in legal dispute over unpaid multi-million pound debts

A former Graff Diamonds franchise partner is currently in the middle of a legal battle over unpaid debts.

Russian-born British businessman Dmitry Tsvetkov, and his two investors, Rustem Magdeev and Emil Gaynulin, opened a Graff Diamonds franchise in Limassol Marine, Cyprus, in May 2015.

Tsvetkov and his wife Elsina Khayrova had been valued customers of the luxury jewellery brand since 2011, and are said to have become ‘good friends’ of the Graff family. As such, the duo were entrusted to run the Cypriot franchise – which was located in an area popular with Russia’s super rich,

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Tsvetkov and his investors were given exclusive rights to run a Graff franchise at Limassol Marina in December 2014. As reported by The Times, the investors had to buy Graff stock worth £23.5 million, at significant discounts, before the store opened in May 2015, and are understood to have obtained jewellery worth tens of millions of pounds more during its operating years.

The business got off to a sparkling start, but the relationship between Tsvetkov and the investors soon turned sour. Three years later the boutique closed and the company behind it, Equix, is now in administration.

Papers filed in the High Court in London contain allegations of unpaid multi-million pound debts, people with links to organised crime attending meetings, and the sabotage of a sale of a £11.8 million rare 40-carat diamond.

According to The Times, the battle started with one of the investors, Magdeev, filing a claim against Tsvetkov in the High Court, saying he had failed to repay him loans of £12.1 million.

Tsvetkov denies these claims and has made a counterclaim that his relationship with Magdeev only soured after he started to have financial troubles. The businessman has also accused the investor of removing stock from the store, preventing the sale of a rare diamond, and having meetings with a person known for ties to organised crime.

Mr Gaynulin and Mr Magdeev are both understood to have admitted to removing stock from the store for the purpose of securing investments, but have denied links to organised crime.

A spokesman for the luxury house has simple said of the case: “During the course of last year, Graff terminated its agreement and ended all dealings with Equix after learning of its internal dispute and its related issues.”

At the moment Graff has no direct involvement in the court action.

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