Elderly neighbors in colored diamond scam???

[NancyK2255T]

I don't know diamonds and I'm a natural skeptic. So I'm looking for insight. I found out my elderly neighbors purchased color diamonds a few years ago. It's been an ongoing investment for the last 3 years. They've spent a half million in loose colored diamonds. They have GIA reports for them all. Last year they spent more money to have the diamonds set in jewelry. The company they have been working with - who sold them the diamonds - said they have a buyer but has produced none. They now have the diamonds back in their safe deposit box but they don't know how to sell them or who to trust. One diamond buyer they showed the GIA report to said the diamonds are only worth about 50K not the 500k they invested. What's the next step to help them? Thank you for reading my long story.

 

[tyty333]

Oh yikes...this is bad. How old were they while they were "investing" in colored diamonds? I wonder if your state has any laws addressing
taking advantage of seniors? I think they might be called "Elder laws". You might want to google and see what your state has. If you
dont mind disclosing the state on PS...sometimes PSers from that state can give some advice.

I would also google for "Senior Advocates" for your state and see if anything comes up that might deal with this kind of issue.

Good luck...I hate hearing about things like this. I always think what if they were my parents?

 

[Karl_K]

hire an experienced appraiser asap and find out what they have.
Where are they located?

 

[NancyK2255T]

I forgot to mention that they are in their 70s.

 

[Karl_K]

In general an appraiser needs to see the diamonds.
Colored diamonds are a weird market that many in the trade do not understand including some appraisers.
I pinged some people that should be able to give more detailed advise than I can about colored stones and this situation.

 

[denverappraiser]

This is very unlikely to end happily.

Any appraiser worth the name is going to need to see them to come up with an even remotely useful document, but they may be able to provide some helpful consultation based on the GIA docs. It's going to take some time to deconstruct all of this because I can pretty much guarantee that the buyers are acting under some incorrect assumptions about how both the diamond and appraisal businesses work. That's the hard part of this assignment. They're not looking for a value as such, they're looking for a sales strategy. That's a very different question. It's not a coincidence that 'investment' diamond houses nearly all operate from outside of the US. This is not a quick question and it's definitely one for a pro. In person if it can be arranged. Soon would be good.

 

[MissGotRocks]

Buying diamonds as 'investments' is never a good idea. Even if they were valued at 500k, finding buyers to pay that price is hard to do. Like Neil above, I doubt this story will have a happy ending. There are countless investment stories that have turned out badly. If someone has something for sale and you agree to buy it at their price, it can hardly be considered abusive or criminal. The fact that the seller of these stones had found an easy mark is probably undeniable but they could not force you to fork over the money unless you wanted to. They were probably ill advised in terms of buying these stones for investment purposes but as always, buyer beware. Homework is a must before investing in anything.

 

[NancyK2255T]

For the most part, were they scammed? Did the company who sold them most likely know they were hugely overpriced? I have Margaret with me here now. She said they got a call from another company in Canada who is interested in their diamonds. They don't know how he got their information. She promised me they would not send him the diamonds no matter how much he offers. She said that she does want to send him a copy of the GIA report. She says, what does it hurt, it's just a copy. What questions should she ask to determine if his company is legit (I just looked at their website and I have doubts already). How does the buying and selling work long distance? They send the money and you send the diamonds? Is there a middleman to make sure each party doesn't take it and run?

 

[NancyK2255T]

I do really appreciate you all for taking the time to help us dissect this. It's all so confusing and definitely out of my area, so much thanks to everyone.

 

[whitewave]

1) do they have a child/children? Those are the people who need to deal with this. It could be their parents are showing signs of dementia etc.

2) appraiser

3) state attorney general

 

[whitewave]

Go to GIA website and cross check the GIA report numbers with the descriptions with what they have.

The GIA inscription is on the diamond girdle and can be seen with a loupe.

I don't get why they are setting them into jewelry

 

[whitewave]

For the most part, were they scammed? Did the company who sold them most likely know they were hugely overpriced? I have Margaret with me here now. She said they got a call from another company in Canada who is interested in their diamonds. They don't know how he got their information. She promised me they would not send him the diamonds no matter how much he offers. She said that she does want to send him a copy of the GIA report. She says, what does it hurt, it's just a copy. What questions should she ask to determine if his company is legit (I just looked at their website and I have doubts already). How does the buying and selling work long distance? They send the money and you send the diamonds? Is there a middleman to make sure each party doesn't take it and run?

Just tell them to stop. Stop sending money. Stop taking calls. Stop everything.

They need to talk to an expert.

What is the name of the company?

 

[whitewave]

Who is their banker? (Rhetorical question) How have they been sending money? Maybe they should call the banker tomorrow and give them a heads up.... lock up accounts, etc.

 

[Rockdiamond]

Oh man- I feel for your friends!!
I have been as vocal as possible advising against considering Fancy Colored Diamonds ( or colorless) good financial investments. I feel that a sort of misrepresentation tarnishes the beauty of what should be an honorable and fun trade. It's dishonest.
Because it's my life's work, I'm passionate about the way the profession acts.

I know of a Canadian company who makes a business out of selling diamonds under this guise.
They will hang their hat on real life increases in FCD values over the past 10 years- some of which are exponential. But apparently there's nothing on the site about reclaimation of the money, if need be.
Mounting the diamonds, in the s case, sounds like throwing good money after bad.

Unfortunately I don't believe there's any legal remedy.

I'll put a bit of thought into possible ways for them to find some sort of resolution - but it will be financially painful for sure.
I feel very badly for your friends.

 

[rockysalamander]

I hope it is as @Rockdiamond says and a known, but safe, scam. But, there have been similar scams that are associated with much worse and more dangerous people. Do not send anyone anything. Do not answer any phone call, emails, texts. Really. They need to seek an attorney first. Even it inadvertently, they could have broken international laws or could be a chain in a more complex scam. Then and only upon the advice of a competent attorney, do they do anything or call for law enforcement or try to deal with the "buyers". I hope it is just a bad decision they made to invest, but they must first protect themselves. If they have a will/trust attorney, they can call that person and under attorney-client privilege and get a referral to a qualified attorney.

 

[Karl_K]

Thanks for the quick response Neil and David.
I had a feeling you were going to say that.
Sad situation all around.

 

[OoohShiny]

For the most part, were they scammed? Did the company who sold them most likely know they were hugely overpriced? I have Margaret with me here now. She said they got a call from another company in Canada who is interested in their diamonds. They don't know how he got their information. She promised me they would not send him the diamonds no matter how much he offers. She said that she does want to send him a copy of the GIA report. She says, what does it hurt, it's just a copy. What questions should she ask to determine if his company is legit (I just looked at their website and I have doubts already). How does the buying and selling work long distance? They send the money and you send the diamonds? Is there a middleman to make sure each party doesn't take it and run?

I wonder of this 'another company' is just the same people...

Just think of the sales model - sell stones for 500% profit on market value to uneducated buyers, buy stones back at half their market price because "I'm sorry, you've been scammed, but we'll take them off your hands for this much".

Rinse, repeat, retire at 40 off your ill-gotten gains.

No need to buy new stock, and only need to make a few calls to find some more suckers. The very definition of easy money.


People like this should have it done to their own parents, so they understand the hurt and loss they cause.

 

[whitewave]

That is the part I really don't get-- if they are finding buyers for the diamonds they sold to the couple, why the need to sell the diamonds to them to start with. SCAM

 

[rockysalamander]

I wonder of this 'another company' is just the same people...

Just think of the sales model - sell stones for 500% profit on market value to uneducated buyers, buy stones back at half their market price because "I'm sorry, you've been scammed, but we'll take them off your hands for this much".

Rinse, repeat, retire at 40 off your ill-gotten gains.

No need to buy new stock, and only need to make a few calls to find some more suckers. The very definition of easy money.


People like this should have it done to their own parents, so they understand the hurt and loss they cause.

Wow! That's a level of devious I did not even think of.

 

[OoohShiny]

Wow! That's a level of devious I did not even think of.

I can't think of another way that a 'completely different' company could have known they had coloured diamonds. It's not like we all go on to a giant 'diamond owner database', is it! (Is it?? lol)

 

[Austina]

I recall seeing something like this last year on one of those rogue trader programmes here in the U.K.

It's absolutely appalling people preying on the old and vulnerable.

 

[denverappraiser]

We don’t KNOW that any deception has happened. We just have a bunch of red flags. The root of the problem is that buying expensive things is enormously easier than selling them. That’s true of everything from diamonds to furniture to fine art. I agree that the unsolicited call from a 3rd party buyer who just happens to know what you have is a bad sign. This is not like selling bonds or even gold bricks where exactly what you have and who might want it is well understood. They're entering into a learning curve that's going to be uncomfortable.

By the way, YOU might want to duck. Again, the chances of unhappiness are pretty high and you might want to not be in the middle of it.

 

[srke]

You just have to first pay the insurance on the shipment of the diamonds which is 4% of their value, so please send 72K to the following bank -

This sounds almost certainly to be a scam.

 

[Alexiszoe]

My partner and I work in the China market for years and this sounds like a big red flag. Getting money out of China is not as simple.

There are a LOT of regulations on capital outflow from China each year. For that amount of money to actually even go through would require experienced lawyers specializing in China-US trade setting everything up for months plus extensive documentation between your neighbors, the company buying the diamonds and the bank handling the transaction before the China government decides if a penny can actually be transferred out, if at all.

EDIT: I just had a look at the company's address and it's actually one of those virtual offices i.e. it's a co-working space where companies can either rent an office address or a physical cubicle / space to set up business. It usually attracts solopreneurs or start ups since it's affordable and lends an air of legitimacy with a business address / phone number.

If they are indeed transacting in such large volumes this gives me pause. The money trail, however, is the most concerning.

 

[Sunstorm]

Of course it is a scam again. 100%. We have had this for decades not just in diamonds. You ONLY need to send them 72 K and then they will disappear.

These companies rip off exactly these unfortunate victims, such as elderly people with money and dementia.

In my opinion your best course of action should be that you take up the help offered to you here, such as contacting the appraisers and others such as Rockdiamond who are experts and legit, ethical people. I hope it is ok I said this.

Besides the above the only thing you can do and honestly I would have done long ago is to contact their family. Now several one of us asked where is the family? My first question would be if they do have family. I totally understand why you care but it is not a good idea to be in the middle of this because if they continue with these companies, this will end very ugly. They seem to not be listening to you.

Again like I said contact the people above and stop and and all contact with these scamming companies. What you can do is also report the company you mentioned above to BBB and the Attorney General.

Hope you can influence these poor people to follow your advice. And if you like of course you can also contact me for general advice but I am not in the US and meeting an expert in real life would be absolutely necessary. Keep in mind any legal issues if you are representing their interests. Their family if there is one may not take it well if say for example you will take their diamonds to a company in person. They may not take your involvement well at all in general except for notifying them of the issue. So please contact the family first if they have one. You also do not want a big problem for yourself later.

If you cannot locate a family member, they have none left proceed as per above, see an expert in real life and report these companies. You can accompany them to an expert but first and foremost this is their private issue and of their family.

So sorry this is happening.

 

[whitewave]

My MIL has early dementia and that is what I wonder here. This is a scam. They are spending someone's inheritance on a scam, or uisng money they may need to live on for another 20 years.

Please try to contact family members of theirs, if there iis a trusted family member like son ot daughter,

 

[rockysalamander]

Simple logic here. If I wanted to mail my friend in China a valuable gift (say a diamond ring), I would call MY insurer and get the ring covered. Then, I would go to the post office and have them mail the package. I might even have them insurance the package. The sender must insure the item. The receiver does not insure and item until they receive it.

Why would a US sender need insurance purchased in China? This defies simple logic.
http://www.ripoffreport.com/reports...ke-brokerage-house-colored-diamond-sc-1351709 *****

http://www.ripoffreport.com/reports...-dobrofsky-ice-colored-diamonds-inc-ic-704529
http://www.ripoffreport.com/reports...d-i-was-asked-to-pay-a-tax-that-i-was-1317943


None of these are a perfect match, but many have the elements of this scam.
http://www.mirror.co.uk/money/diamond-fraudsters-conning-unwary-investors-7749273
http://www.dailymail.co.uk/news/art...life-savings-coloured-diamonds-worthless.html
https://www.welivesecurity.com/2012/12/10/diamonds-are-forever-and-so-are-investment-scams/

 

[MollyMalone]

My recommendation: on Monday, call Elaine Dodd, Executive Vice-President of the Oklahoma Bankers Association (a private association, not a government entity) & head of its Fraud Division, the first (and possibly only) state bankers association to have established and be supporting its own Fraud Division.
http://www.oba.com/bankers/contact_us.php
http://www.bankinfosecurity.com/online-fraud-how-one-state-fighting-back-a-1741

Her keen interest in the financial exploitation of seniors is one of the reasons she's been recognized by the Oklahoma division of the FBI & the OK state Attorney General's Office:
https://archives.fbi.gov/archives/a...ch/community_outreach/dcla/2014/oklahoma-city
https://oag.ok.gov/oagweb.nsf/0/E26A847BF59D44CB86257B19005FFFA8!OpenDocument

Ms. Dodd accepted the Oklahoma Banker Association's offer of the VP position in 2003, after more than 20 years in law enforcement. So she's no neophyte & I bet has well informed, objective, realistic perspectives re various law enforcement and social services government agencies (e.g., OK's Adult Protective Services), in addition to whatever is possible on the banking end. She may be willing to make recommendations for a lawyer, but it's also entirely possible that she won't feel comfortable doing that or is precluded by OBA policy.

Plus, she seems to have a warm personality : - )
http://newsok.com/article/3572269

So I'm thinking that she will be a good source for "next steps" info, albeit unrelated to the diamonds themselves, that you can relay to your neighbors & a trusted member of their family (I'm sure hoping there's an honorable, honest relative they're comfortable with!)

 

[Tourmaline]

Total scam. 100%.

 

[Elizabeth35]

Their website references their Hong Kong division 9under employee Mark Rosen).

And according to this website---they are using a service to hide their identify.

https://www.scamadviser.com/check-website/sternbergcapitalgroup.com

I realize it is probably irrelevant, but how did they come to decide in colored diamonds? Did they decide to do this and reach out to this company?
Or did this company phone or email them?

I agree that someone in their family needs to be aware of this.