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WARNING! Enchanted Diamonds Scam! Buyers Beware!

Bron357

Ideal_Rock
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Jan 22, 2014
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3,874
It’s an interesting legal conundrum. My naive thought would be that if ED hasn’t paid for diamonds in the inventory or had entered into a purchase agreement with a buyer and money paid for any diamonds in the inventory, then ED doesn’t have “clear title” to the diamonds that are to be auctioned. I guess it’s a complex variation of “theft”.
Here in Australia, if I could establish ownership ie a receipt for payment and I could identify the diamond as mine ie I had the GIA certificate number and the diamond in question “matched” then even if it is sold at auction or on eBay or anywhere, my title remains good and the diamond would be returned to me.
Though I think in this case, the affected buyers paid money to ED and ED never actually proceeded with the acquisition of the diamond/ s in question. Though if I were a diamond broker who had provided ED with diamonds that weren’t paid for, I would be seeking their return via legal channels.
 

MollyMalone

Ideal_Rock
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* * * if I were a diamond broker who had provided ED with diamonds that weren’t paid for, I would be seeking their return via legal channels.
According to the bankruptcy petition, consumer credit card orders that were not fulfilled were placed between the end of April and June 10. But although the petition form asks for the date(s) of invoices for goods that were unpaid as of the June 20th filing date, Online Diamonds International's bankruptcy attorney did not supply any of those, so the petition itself doesn't give a clue as to how old those invoices from the diamond wholesalers were as of June 20. In any event, once the Chapter 7 bankruptcy petition is filed, a creditor must cease all collection efforts (including a mere phone call or email outreach) because Congress thought it important to immediately freeze the bankruptcy "estate" in order to benefit (to the extent possible under the statutes) all creditors.

There are some statutory exceptions not applicable to this corporate bankruptcy (e.g., individuals who file a Chapter 7 bankruptcy petition do not thereby insulate themselves from child support litigation/collection), and the Bankruptcy Court judge can grant a motion to lift the statutory automatic stay with respect to a creditor under certain, narrow circumstances.
 

the_mother_thing

Ideal_Rock
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Test post

Just tried posting something to see if it would make this thread stop appearing as ‘unread’, as was noted in the forum upgrade issues thread. I think the deal here is someone posted something that was removed by admin so we couldn’t see it, yet it kept the thread appearing ‘unread’.
 

Andy Tan

Rough_Rock
Trade
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Jul 30, 2019
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Oh wow! Thank you guys for sharing your experiences. I have been reading up more about stones and the authenticity of possibly buying it from resellers or private companies. It does help to know as my circles of friends are getting engaged now as well. Do you guys know which countries are most likely affected by this type of frauds?
 

diamondseeker2006

Super_Ideal_Rock
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Jan 11, 2006
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55,375
Oh wow! Thank you guys for sharing your experiences. I have been reading up more about stones and the authenticity of possibly buying it from resellers or private companies. It does help to know as my circles of friends are getting engaged now as well. Do you guys know which countries are most likely affected by this type of frauds?
Fraud can happen anywhere. We can give recommendations for trustworthy US vendors on this site.
 

Bron357

Ideal_Rock
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Jan 22, 2014
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3,874
Fraud / bankruptcy of companies can happen anywhere anytime. Obviously you can take more comfort with well known, long established companies but nothing is guaranteed.
My advice, always pay by credit card or by PayPal. Yes, some vendors will offer a discount for “bank wire transfer” but if things go bad you will be on a long list of other creditors. it is worth paying the extra to use your credit card or PayPal for the security.
The reason why vendors offer a discount for bank wire is that they get charged a commission/ fee if you pay them using your credit card or PayPal.
Never ever send money via Western Union. scammers paradise!
 

Whisper89

Rough_Rock
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Nov 26, 2018
Messages
98
My advice, always pay by credit card or by PayPal. Yes, some vendors will offer a discount for “bank wire transfer” but if things go bad you will be on a long list of other creditors. it is worth paying the extra to use your credit card or PayPal for the security.
Hi, what would you suggest for overseas customers when American-based vendors request payment by wire transfer only? I've seen this with a PS trusted vendor (I can't currently remember who they were) who would only accept this form of payment from international customers.
 

diamondseeker2006

Super_Ideal_Rock
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Hi, what would you suggest for overseas customers when American-based vendors request payment by wire transfer only? I've seen this with a PS trusted vendor (I can't currently remember who they were) who would only accept this form of payment from international customers.
Zero issues with wiring money to trusted vendors like Whiteflash, High Perfomance Diamonds, Victor Canera, etc. I've done it many times. I'd have to think about whether I'd wire money to the online companies that mainly have virtual inventories and have less personal service. I just don't know how long it might take for you to receive a refund if you decided to return the diamond. They all likely refund by check and not by return bank wire.
 

MollyMalone

Ideal_Rock
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Jun 2, 2013
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Update on the auction I first posted about on September 24 at post # 413:

The auction is now scheduled to begin at 11:30 AM on Thursday, December 5. Prospective bidders can view the lots at the auction house in Central Islip (Long Island) that morning from 9:00 - 11:30 AM -- or call to make an appointment for the day before. A 3rd Manhattan jewelry store's inventory (Traver's) has been added to this bankruptcy auction.

Although the auction house has not yet uploaded the Terms & Conditions and/or a bidder registration form, a partial online catalog can now be seen & I imagine that will continue to grow between now and December:

The good news for consumers who might be interested in the auction is that although melee, mountings, etc. are being sold in parcel lots, at least the first 28 lots each consist of just 1 loose diamond -- and with rare exception, those are accompanied by GIA reports & the stones also are inscribed with the GIA report number.

The GIA report numbers appear in the partial catalog linked above, but you can more easily see the lab reports for yourself by clicking on the images in the Partial Photo Gallery.
 

MollyMalone

Ideal_Rock
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P.S. So far as I can tell, there's little of substance to report on the legal front: the office landlord and the Bankruptcy Trustee have reached a settlement, approved by Judge Bernstein, whereby the landlord is being allowed a "general unsecured claim" in the amount of $73,145.00. And Joshua has hired his own attorney who has filed a Notice of Appearance & a Request for Notices and Papers with respect to the corporate bankruptcy proceeding.

Joshua is purportedly continuing to represent himself in the New York state courts :roll:
 

missy

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RSZ

Rough_Rock
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Jun 17, 2019
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50
My understanding is that they are trying to match GIA diamonds with customers and receipt of payment from the victims and the stones that they purchased prior to the auction, if there were any stones in inventory that technically were someone else’s property when he shut the doors. Here’s hoping!
 

MK Malone

Shiny_Rock
Joined
Mar 24, 2019
Messages
232
My understanding is that they are trying to match GIA diamonds with customers and receipt of payment from the victims and the stones that they purchased prior to the auction, if there were any stones in inventory that technically were someone else’s property when he shut the doors. Here’s hoping!
Thank you for this update @RSZ. I often wonder about all the victims I got to know and how things are going for each person. Still praying for justice.
 

DoeEyes

Brilliant_Rock
Joined
Jul 27, 2018
Messages
602
How does the auction work? Can anyone go or is it only for jewelers with some kind of license? How much less than retail would the single stones generally go for?
 

MollyMalone

Ideal_Rock
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How does the auction work? Can anyone go or is it only for jewelers with some kind of license? How much less than retail would the single stones generally go for?
I'd be surprised if you have to show a business license of some sort (pawnbrokers are supposed to get a license to conduct business in NY, but there is no license required of jewelers who do not act as pawnbrokers). I'm thinking that after the auction house posts the Terms & Conditions and a bidder registration form for this auction, I'll start a new thread asking for feedback from those with experience with this particular kind of auction. Sound good?
 

MollyMalone

Ideal_Rock
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I have been curious as to any update over this situation?
I'm so sorry, I was slammed at work the last few weeks of December and "zoned out" on the auction. As of right now, I'm not seeing any info about the auction results.

Re the US Bankruptcy Court proceeding, Matter of Online Diamonds International d/b/a/ Enchanted Diamonds,
  • 11:30 AM, January 23 -- next date for the § 341 hearing a/k/a "meeting with creditors" in this Chapter 7 bankruptcy proceeding. The 341 hearing is conducted by the bankruptcy Trustee (not the Bankruptcy Court judge) at the courthouse at 1 Bowling Green in lower Manhattan.
Some general information about 341 meetings/hearings:

Re: Libertas Funding LLC v. Online Diamonds International & Joshua Niamehr, Nassau County Supreme Court Index No. 0608770/2019
  • Joshua Niamehr lost his motion to dismiss this lawsuit against him individually(see my September 14 post #412 in this thread). By decision and order dated November 22, 2019, Hon. Stephen M. Jaeger denied that motion, finding that "Nothing in the Agreement releases the Guarantor (Joshua Niamehr) from his obligations therein. Further, it's long-held precedent that the personal liability of a guarantor of a corporate debt is not affected by the institution of bankruptcy proceedings involving the corporation [case citations omitted]."
  • The judge also ordered Niamehr to serve his formal Answer to the allegations in the Complaint within 30 days. He has not done that. Instead, it looks like (based on the online docket page) that he's hoping to appeal the denial of his motion to dismiss.
  • The judge has scheduled a preliminary conference on this case for January 21.
Re Claussen v. Online Diamonds International & Joshua Niamehr (NY County Supreme Court Index No. 0653615/2019) -- this is the lawsuit initiated in New York County (Manhattan) Supreme Court on behalf of one of the ED victims by Peter Cane, Esq., the lawyer hired by Rare Carat's CEO.
  • Niamehr filed his own motion to dismiss this lawsuit against him in September. After Mr. Cane filed papers in opposition to that motion, Niamehr hired a lawyer (Michael J. Kasen, Esq.) who, it appears, was permitted to file supplemental papers in support of the motion.
  • One of the 2 major arguments found in the dismissal motion is that this matter must be resolved by a private arbitrator -- not a court -- because, according to Niamehr, when customers ordered a ring from Enchanted Diamonds, they were advised, below the Place Your Order button on the webpage, that "By placing an order, you are agreeing to our Privacy Policy and Terms of Use." And when you clicked on the Terms of Use hyperlink, a binding arbitration clause was one of the terms. Although a lengthy quotation from purportedly the Terms of Use page appears in Niamehr's amended affidavit in support of the motion to dismiss, there are no screen shots. Mr. Clausen replied by swearing that he does not remember seeing any such thing.
  • Oral argument on the motion is scheduled for March 25. That's a long hiatus, so I'm guessing the judge is hoping that the parties will reach a settlement before oral argument is heard.
 
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MollyMalone

Ideal_Rock
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2,999
P.S. My eyebrows shot up :-oupon reading this run-on sentence that begins at the bottom of the first page of Mr. Kasen's November 14th Memorandum of Law re the motion to Dismiss the lawsuit in the NY County Supreme Court:

"As a direct result of a billing and price setting dispute between Enchanted Diamonds and Rare Carat and Rare Carat in which Enchanted believes it was fraudulently billed in excess of $1,000,000.00 and was deplatformed after refusing to go along with Rare Carat's illegal price fixing scheme, Enchanted encountered significant business losses and faced mounting debt leading to the filing of a Chapter 7 Bankruptcy Petition on June 20, 2019."​

This is a "bald-faced" representation, made without citation to any sworn allegations of fact or documentary evidence. I myself would never make such an unsupported representation in a legal memorandum filed with a court & think it's professionally irresponsible to do so.
 

Garry H (Cut Nut)

Super_Ideal_Rock
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  • One of the 2 major arguments found in the dismissal motion is that this matter must be resolved by a private arbitrator -- not a court -- because, according to Niamehr, when customers ordered a ring from Enchanted Diamonds, they were advised, below the Place Your Order button on the webpage, that "By placing an order, you are agreeing to our Privacy Policy and Terms of Use." And when you clicked on the Terms of Use hyperlink, a binding arbitration clause was one of the terms. Although a lengthy quotation from purportedly the Terms of Use page appears in Niamehr's amended affidavit in support of the motion to dismiss, there are no screen shots. Mr. Clausen replied by swearing that he does not remember seeing any such thing.
Hi Molly,
Thanks for all your efforts. Surely the Wayback machine would have captured the terms and condistions page? I had a quick look but the wayback site is way more complex now and beyond me.
 

MollyMalone

Ideal_Rock
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Jun 2, 2013
Messages
2,999
Thanks for the reminder about WaybackMachine, @Garry H (Cut Nut) --here's the most recent (November
2016) Enchanted Diamonds.com's Terms of Service/Use that I was able to retrieve from Wayback's archives

And yep, section 21 lays out the "agreement" to resolve claims via arbitration; informs you that "YOU ARE GIVING UP YOUR RIGHT TO GO TO COURT" (except for matters that can be taken to Small Claims Court); etc..

 
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matt_k

Rough_Rock
Joined
Jan 1, 2020
Messages
86
I thought/think ‘Boyne’ is Texas Leaguer’s last name (first name is also Brian/Bryan). :confused:

(Didn’t want to tag him since this thread has zilch to do with Leaguer’s company and don’t want it misconstrued in any way).
may i ask the size, color, and clarity grade of the diamond on your profil pic, @the_mother_thing? it looks AMAZE-balls.
 

the_mother_thing

Ideal_Rock
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MollyMalone

Ideal_Rock
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Maltz Auctions has now submitted its report on last month's auction to the Bankruptcy Court. The auction house reported that the gross sales totaled $114,425.00; it is seeking a total of $14,241 in reimbursement for the expenses related to holding the auction & payment of its commission (the court previously set the commission percentages; the auction house did not dictate its commission). Assuming the judge grants their application, the auction added just a bit more than $100,000 to the bankruptcy "estate" for distribution to creditors.

Below are the winning bids for the 15 ED diamonds greater than 1 ct; the GIA lab report numbers are included in this roster if you want to see more details on these stones:

auctioned  Enchanted Diamonds stones >1 ct.png
 
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