An Israel diamond Dealer is in the centre of a major 65 million diamond fraud scheme.

The dealer was identified as a well-known Israeli dealer Hanan Abramovich and head of well known and reputable company Hanan Abramovich Diamonds. The suspect has been arrested and is being questioned on suspicion of embezzlement,” said a police spokeswoman.

The investigation was started after a number of dealers from the Israel Diamond Exchange (IDE) complained the Abramovich firm owed them “tens of millions of dollars” for gems it purchased but never paid for.

Abramovich allegedly had taken gems worth $60-65 million from 12 leading diamond dealers without paying for them or giving them back. There is concern that some of the dealers will be forced into bankruptcy, media reported.

Abramovich’s lawyer denied his client’s connection to illegal activities and insisted the dealer’s business had simply failed.

“We are talking about a huge deception by a man who planned it a long time in advance,” the managing director of the Israel Diamond Exchange Eli Avidar told The Times of Israel newspaper. “He took advantage of the ethical code of the exchange members.”