$9 Million Diamond Fraud Detailed in Unsealed Criminal Complaint

April 5, 2017

It reads more like a Hollywood script than a federal  criminal complaint. According to "Ten Arrested For Defrauding Victims Out Of More Than $9 Million In Diamonds / Schemers targeted victims in New York, Las Vegas, and Mumbai, India" (Press Release, United States Department of Justice, 17-094 / April 5, 2017):

Since in or about 2015, the FBI has been investigating a series of predatory frauds perpetrated by a group of diamond merchants in New York City. This group swindles diamond wholesalers in a variety of ways, and then resells the ill-gotten diamonds through Manhattan's diamond district.  In order to avoid detection, the group focuses on obtaining small round stones called melee diamonds, which are virtually untraceable, as they do not bear the unique numerical identifiers common on larger stones.

The group uses a variety of methods to defraud its victims, including bad checks, false references, forged documents, and tall tales-all to convince its victims to part with their diamonds before receiving payment.  The group's most common technique is the "bust out": first the group builds up credit and trust with a victim by paying for goods on delivery, and then, at the moment of maximum credit, the group walks away with the millions of dollars in diamonds, leaving the victim high and dry.

Once victims begin to realize their predicament, and begin to insist on payment, members of the group refuse and, instead, inform the wholesalers that their diamonds have been lost, or that another customer took the victim's diamonds and has refused to pay, or that a different member of the group will repay the victim at some point in the future.  Members of the group have even conditioned payment on the victim's willingness to assist the group in still another fraud.