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| Gems & Jewelry |
Swindler’s List
Carol Besler
05/03/2004
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The man on the phone claimed to have a small supply of investment-grade
emeralds left. The drug lords, he said, were taking over emerald mines all over
Colombia in order to launder money, so this particular high-yield investment was
becoming increasingly hard to find. At the other end of the call, a busy
executive who had heard something in the news about the emerald problem in
Colombia listened, and decided he could trust this broker, who claimed to be
from Zurich Exchange.
Swindlers target the affluent, knowing we tend to measure the cost of
opportunity differently,
and can often bear the risk of investing in
illiquid assets. |
“That name got me past the gatekeeper [his
assistant],” says a former con man who used to sell so-called investment-grade
gemstones over the phone but who, since serving a prison sentence for mail
fraud, has been cooperating with the U.S. Postal Service in its investigations
of this type of crime. The former con man, who spoke on condition of anonymity,
made $3 million in the two years he worked the phones for a gemstone scam
operation in the mid-1990s. He would call people with the means to consider
unconventional investments and persuade them to buy gemstones, mostly emeralds
or rubies, and occasionally more unusual stones like opals, tanzanite or topaz.
Whatever he peddled, he assured the potential buyer that the gems were large,
rare and beautiful—the sort of gems that Christie’s or Sotheby’s might
consign.
What the buyer actually received was a small, off-color stone; not
fake, but nearly worthless. The gemstones delivered by these criminals are just
colorful baubles, barely commercial-grade and usually under 2
carats.Authorities estimate that well over 100,000 people, representing a
veritable Who’s Who of successful, affluent professionals, have been taken in by
these operations in recent years. These are not simple scams directed at
middle-income strivers; they are extremely sophisticated, often difficult to
identify, and usually impossible to prosecute.
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