This time I want to warn you against a kind of scam, which was invented in Germany during the 1980ies and which, after a decade of relative calm, seems to stage a comeback these days.
In this popular scam rubies, sapphires and emeralds of inferior quality, sealed in plastic boxes common in the gemtrade, are offered for a fraction of the grossly inflated price quoted in the accompanying certificates.
The victims are imprudent bankers, who fall for the pompous certificates and accept the stones as security for a loan, as well as private investors wrongly sensing big profits. In some cases we were contacted by people who were offered or had already accepted gems in lieu of payment by debtors.
It´s always the same routine: the seller claims to have a serious cash shortage which urgently needs to be settled. For this reason he is willing to sell for ridiculously little money. Because of the urgency there is no time for the victim to doublecheck the certificates. At last the victim accepts because at a price of merely 10% of the certified value nothing really can go wrong, can´t it?
Well, it can and it will go wrong! The catch are the "certificates" which hype very low-grade stones, as they can be bought at every Indian street corner for a few cents, to a value of several hundred Euros.
To give you an idea of the magnitude: during the 1980ies and 90ies I was called in by court surveyors several times. I saw opaque, miscoloured ruby cabochons which no jeweller would have bought even for 5 Austrian Schillings (less than 40 € cents) valued at 2000 Schillings (€ 145) p.ct. They had been given as security for a bank loan of 10% of the assessed value.
All of the defrauds known to me had several things in common:
- The certificates generally are issued by internationally unknown German gemmological labs. In one case the issuer was a Polish and in one case a British laboratory. There was not a single case in which certificates of internationally renowned institutions like GIA, Gübelin, GRS (Dr. Peretti), DSEF (German Foundation For Gemstone Research) or the like were presented.
Note: the big institutions only certify the genuineness. They do not give assessments of value. However, with such large and "valuable" lots of gems, which are almost exclusively offered to and by laypersons from outside the gemtrade, one should expect internationally accepted certificates to be presented along with the local assessments.
- The certificates usually consist of one page per box. Quite noticeably the transparency, particularly of the cabochons, is generally described as "good", "very good", "high" or similar, even if this obviously contradicts the gems visual appearance.
Furthermore the trade level of the assessment is hardly ever disclosed. Reputable appraisers usually state, whether the assessed value is a wholesale price or a retail price.
- The gems are always offered in rather large quantities, packed and quite often lead-wire sealed in small plastic containers commonly used in the trade.
To my knowledge this kind of defraud has never been attempted with (large) single stones.
- The combined value per offer usually lies between € 50.000 and € 100.000 but can be substantially higher in rare cases. The largest figure, which I know of, was 160 million Schillings (1.16 million €). Fortunately in this case the potential victim smelled the rat and the attempted defraud was exposed.
[Note: in March 2014 a Viennese lawyer was asked to broker the sale of such gems. The combined "value" amounted to 37 million Euros]
- The average gemstone weight per box lies between 50cts and 100cts. The boxes are usually filled tightly.
- Only rubies, sapphires and emeralds are offered. I know of only one instance where this kind of defraud has been tried with other gems.
[Note: in 2012 this fraud was, for the first time, attempted with irradiated Topaz]
- In most cases cabochons and facetted stones are offered together but occasionally I did encounter offers of cabochons only or facetted stones only.
- The average weight of the cabochons generally lies between 0.50cts and 2cts per stone. Only occasionally cabochons of up to 5cts can be found.
- The average weight of the facetted stones is significantly lower and generally lies between 0.20cts and 1cts. Occasionally smaller stones (mostly rounds), as well as larger stones of up to 3cts are used.
- Ruby cabochons are opaque and of dark red to slightly brownish red colour.
- Quality of facetted rubies varies from bad colour (brownish red) and medium to good transparency to good colour and complete opaqueness. In any case the gems are absolutely unsaleable in the serious gemtrade.
- Transparency of sapphire cabochons sometimes is slightly higher than that of ruby cabochons but still pretty bad. The colour almost always is a dark, nearly blackish blue. Characteristics of facetted sapphires are the same as those of facetted rubies.
- Emeralds (cabochons and facetted gems) generally are of higher transparency than rubies and sapphires. The colour of emeralds is either very light or very dark. Often they sport a plethora of black inclusions which renders the stones unsaleable in the trade.
Whether the sellers are the scammers themselves or persons that have been cheated and now - acting in good faith and without the intent to defraud! – try to turn the gems into money is sometimes impossible to decide.
But be that as it may, we of the Vienna Gem Center can give only one piece of advice: Stay off, however temptingly low the price may be!
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