A judge issued a tentative ruling rejecting Anthony Thomas' claim to ownership of the Bahia Emerald.
Thomas testified that he purchased the emerald for $60,000 from Brazilian miners in 2001, and that the emerald was stolen before he had an opportunity to ship it to his Morgan Hill home. He says he lost the bill of sale when his house burned down.
Thomas is one of several people to claim ownership of the emerald.
The 840-pound gem is said to be the world's largest raw emerald and worth hundreds of millions of dollars.
The emerald will remain at the Los Angeles County Sheriff's Department until the ownership dispute is resolved.
The Associated Press contributed to this story