GIA: Paying “Money For Nothing”
May 11, 06Has the GIA fallen victim to an enormous hoax? Months of investigative journalism by this author have revealed several facts that ostensibly contradict material assertions made by plaintiffs in the now-settled lawsuit in the Supreme Court of New York known as Max Pincione versus Vivid Collections, Moty Spector, Ali Khazane, and the Gemological Institute of America. The basis of the legal action was the assertion that sales transactions involving a 103.78-carat pear-shape diamond (D-Flawless) and a 37.01-carat round diamond (H-VS2) were cancelled by a member of the Saudi Arabian Royal Family, allegedly after discovering that the GIA grades were not representing the true grades of the stones. Our investigation seems to indicate that in the case of the 103.78 carat diamond, no price offer was made by the Saudi Royal House and that the transaction never was concluded – that that there was never a need to refund, which implies that there had been no financial loss to the Plaintiff.
The case was settled late last year with the GIA reportedly paying an undisclosed amount (that our sources say totaled $3.5 million) to Max Pincione. None of the other defendants in the case participated in the payment, even though GIA Chairman
As the case has been settled, the various affidavits made by all the parties in the case have become irrelevant. “In any court action of this nature it is to be expected that there are some statements which could be challenged in cross examination and may not be correct,” says a source at the GIA, who acknowledges that “well before we made the settlement we had received some indication that not all the facts may have been as stated.”
Our journalistic investigation, based on interviews with many sources intimately familiar with the case, has revealed as follows:
(1) The 103.78 carat diamond is owned, and was owned at the relevant time, by a very prominent Far Eastern businessman. This businessman had purchased the diamond from Vivid Collection and, at a later stage, had given the stone in consignment to Vivid Collection with the request to find a buyer. Max Pincione received that stone in consignment (from Vivid) to offer to his Saudi clients.
(2) There was no question about the grade. The Far Eastern businessman had also obtained a certificate from the Swiss Gublin Laboratory, which had awarded the
(3) The Far Eastern businessman did not allow Vivid to send the diamond out of the
(4) The member of the Royal Saudi family was the brother of the King, Prince Nawaf Bin Abdel Aziz al Saud.
(5) According to sources, which include the person who traveled with Plaintiff to that meeting, at the meeting there was no offer made by the Saudis to purchase the stones. Moreover, there were no questions raised on the accuracy of the grade. The grade was not in doubt. There was no offer and there was no transaction.
(6) The 103.78 carat stone is still in the same hands of the Far Eastern businessman – and the stone is not kept in the
The owner wants to protect his anonymity, something we respect.
Our investigation has further revealed that some of the defendants (but not the GIA) who clearly knew that no sale had been made, attempted to purchase the
We have further learned that the GIA had been aware of some of the facts we discovered, but not all, well before it agreed to settle with Max Pincione. In its decision whether to settle or allow the case to pursue its full course, the GIA made a risk analysis weighing the impact of a possible revealing of incorrect statements versus the impact of the publicity in the market in respect to fraudulent upgrades. Moreover, knowing certain facts is not the same as being able to prove them in court.
One of our sources noted that cooperation between the lawyers of Vivid and the GIA could have led to a different outcome. This seems to us as pure conjecture.
The case is closed. Under
If the case had no real merits, the damage done to the GIA is enormous. However, and that is the other side of the coin, the GIA might have never taken the actions against the bribers – and no changes at the management of the organization might have been made. The forthcoming meeting of the Board of Governors of the GIA will have something to ponder about – after all, the settlement was paid out of the non-profit organization’s revenues. It may have been, as the famous song goes, “money for nothing.”
Have a nice weekend.