Part V: "Since Time Immemorial"

Read about The Inquirer's investigation.

by Andrew Bast

“The diamond industry has operated like this from time immemorial,” says Dr. Joseph King, a professor of Terrorism and Organized Crime at John Jay Criminal College. “When you look at 47th Street, it’s a whole system for black market operations. Illegitimate diamonds is part of the business and it’s not going away.”

According to one 47th Street store owner who wouldn’t speak on the record as he said this was a subject for which he could be “crucified,” fencing is a “big time” problem. He said that people are working with the authorities to combat illegal operations in the Diamond District, but asked, “Where’s the FBI?” and said that they needed major sting operations to weed out the handful of bad businessmen who are ruining it for the rest of the industry. Indeed, the sentiment is a common one: the Diamond District is no different than any other trade, and in turn, there are a few unethical players who will never be banned entirely.

Though it seems federal agencies have kept at least an eye on the Diamond District, King points out that the change in strategy since 9/11 dictated by the White House has reduced the manpower available to combating illicit practices in the Diamond District because the focus has shifted to immigration.

“For someone guilty of fencing, I know of no mechanism to ban them from the industry,” says Cecilia Gardner, president of the Jeweler’s Vigilance Committee, an organization whose mission is to “maintain the jewelry industry’s highest ethical standards.” While Gardner acknowledges the trend in outsourcing and agrees that work for diamond brokers is disappearing, she says, “the reality is, the sky is not falling.” She writes off fencing and money laundering on 47th Street as a small fraction of the industry and says it’s no different than any other.

Only, for a street where everyone knows everyone else and what they’re up to, self-policing remains a fantasy. Take the case of Kim’s Jewelry. As it turned out, the FBI arrested Castro and Guerro; the two turned states evidence and testified against Kim. Kim didn’t even testify in his own defense, and it took less than an hour for the jury to convict. However, Kim’s Jewelry is alive and well at 26 W. 47th Street. Likewise, though Eduard Nektalov has been killed and his father convicted, Roman Jewelers is just down the block at 74. W. 47th.

Jewelry is a changing industry, and 47th Street has done little to keep up. The labor force has moved overseas. The deal-in-a-handshake business model faltered when the business grew outside of a once-insular world of suppliers and retailers. Markets on the Internet have democratized the business. All the while, fencing and money laundering have carved out a very regular niche in the industry to co-exist, hired killings and all, alongside the legitimate diamond enterprise.

Bad for sellers, bad for buyers and bad for the Diamond District.

(Photo of a 28.8 carat raw diamond from flickr.)

Full investigation: Part I, Part II, Part III, Part IV and Part V.

Comments

[THespos]

"Since time immemorial..." the diamond industry has operated like this? I think not.

Diamonds rose to prominence in engagement rings in the 1930s. In 1932, worldwide diamond sales were $100,000. In 1939, after DeBeers implemented marketing campaigns in the US, it became $23 million. Diamonds have little inherent value - it's all marketing, from the control of supply to ad campaigns that convince us to spend at least 2 months' salary on diamond engagement rings.

[tungsten wedding ring]

Gorgeous! if you have this kind of diamond you can make your own design for your engagement ring,and i agree on this blog that we have to maintain the jewelry industry’s because of highest ethical standards.

by: rhianne