Truth and Justice – No Blackmail or Extortion
May 22, 08 by Chaim Even-Zohar
Julius Klein Diamonds (JKD) has filed a motion in an Ohio court alleging that jeweler John Stafford, who is suing the company for alleged responsibility for the loss of a pink diamond supposedly worth $1.5 million, is now resorting to “extortion” and “blackmail.” JKD is claiming that Stafford is using the subpoena to the Gemological Institute of America (GIA), supposedly connecting Klein to the “Certifigate” scandal, only in order to obtain a quick and enormous settlement in the commercial dispute between the two parties.
The court papers also include two articles that we have written and that have appeared in this column, almost suggesting that the press is being used by one party against another. I will comment on that later. In one of our articles we noted that the Ohio court had specifically prohibited the introduction of GIA “Certifigate” materials into the trial, and JKD’s motion is basically a request to have the plaintiff held in contempt of court for trying to circumvent the order. We haven’t seen a response by Stafford to that charge, so we don’t know if there is, or isn’t, a legally acceptable reason for his course of action. Actually, it is of little interest to our readers.
What we now do know and what is of interest is that around the same time the subpoena for “Certifigate” information was issued, the lawyer for Stafford made a settlement demand in the missing pink diamond case, which JKD quoted in support of his motion. There are two paragraphs in that settlement demand that seem quite upsetting and unsettling:
(1) In reference to the ability of JKD to get certificates from the GIA, Stafford’s lawyer claims: “We now know that JKD did not have any such [client] account [with the GIA laboratory] and many will be in attendance including investigative journalists to hear the truth. JKD’s artful dodging in initial Court filings of Certifigate issues will not be permitted and once the lack of a JKD account in February 2006 with GIA is disclosed publicly, any harm to JKD for non-adherence to the DBBP [sic] [Diamond Best Practice Principles] will far exceed any settlement demand in this letter.”
If I may translate this legalese into plain English, the lawyer is implying that JKD’s potential trouble with the DTC and other producers or stakeholders will be much larger than anything the plaintiff is demanding from JKD. That is quite a ruthless, though straightforward, approach.
(2) Anyone would have guessed that Stafford might try to get his $1.5 million through the GIA subpoena, provided that indeed damaging information on JKD would have come to light – something that we absolutely don’t know, nor wish to imply. Stafford must think he knows something we don’t, as his lawyer writes: “We are authorized at this time to submit a settlement demand of $15 million. The value of the Pink Diamond has appreciated greatly in today’s market, and there have been expenses associated with this litigation. Given the allegations and legal theories in this case, any finding of compensatory damages will include punitive damages. As part of the settlement, our clients would agree to a confidentiality provision which would preclude any cooperation with any journalist…”
I am not sure that I like that reference to journalists. The last thing we want is to get involved in what seems increasingly like a very tasteless commercial dispute. It seems clear that we may have been used. My name was mentioned in various places in JKD’s submission to the court, and I have no problem with that because I always stand behind what I write. However, I am an investigative journalist; I report; I interpret – I don’t create news. I couldn’t care less who wins this trial – I do, however, care a lot about getting the GIA “Certifigate” information into the open.
On a slightly personal note, I’d like to say clearly that I don’t like bribers, but I loathe blackmailers. The GIA has set a bad precedent by already paying out a few million dollars in another lawsuit just to avoid the information on “Certifigate” from coming out. That was a mistake, something I’ve said before and will continue to say.
The GIA has continuously maintained that it doesn’t want to release information for fear of being sued by parties mentioned. It now has an opportunity to do so with no fear of legal repercussions. The GIA needs to comply with the legally issued subpoena, and it should do so without delay – the sooner the better. Procrastination will not make it look any better. I sincerely hope that JKD will not give in to blackmail.
The only transaction price for the missing 5.56 carat pink stone that has been proven (or admitted) is $8,000, i.e., $1,438 per carat. The compensation that is now sought by Stafford (including legal costs) is for $2,697,841 per carat. To me, with all due respect, this doesn’t make sense – to say it politely. If JKD will consider paying this huge amount, the company will simply be throwing money down the drain. It would be interpreted by people in the industry that the company feared the GIA information so much that it was willing to yield to what JKD itself has labeled “blackmail” and “extortion” – and it won’t stop there. The “Certifigate” information – all of it – will come out eventually. Justice will be done. There is no other option. Paying now may delay disclosure; it will not prevent it.
The best thing that can happen in the current scenario is for the GIA to quickly and unequivocally release the information requested by the court. Let it be out there. At some point, it will happen anyway. I don’t want to speculate on what will happen next. My feeling is – and this may surprise some of our readers – that most players in the industry will be far more forgiving and gracious than generally is expected. I even believe that the DTC in London will have an interest in solving rather than exacerbating the issue. After all, it is now in the process of paying consumers some $300 million for having artificially and illegally overpriced its sales prices. It will be difficult for the DTC to “sit in judgment” of others.
Donna and Ralph, seize the moment! Either exonerate JKD or bring out all the information into the open. That is the only way to get closure on “Certifigate.”
Have a nice weekend.