A Jewel of a Scam

     A new diamond substitute, Moissanite, is coming this summer to a pawn shop near you.   So, who cares?   There are other diamond substitutes on the market.   However, Mosissanite is the only substitute that actually test like a diamond.   Cubic zirconia and other diamond substitutes are easily detected.  However, a traditional electronic diamond tester will test Moissanite positive.  In late 1997, according to an ABC news report by Amanda Endewelt and James Walker, "28 out of 30 Geologists consulted stated that Moissanite was a diamond."  Twenty-eight out of 30.  That means more than 90 percent of the gem professionals erred.  What do you think will happen when the pawn shop dealers begin to sell this material late this year?

   The Manufacturer believes this product is revolutionary.  They have invested $12 million.  Shortly after the substance was announced to the public, their stock soared to $45 million.

This product will be offered initially in sizes under 1.50 carats in round shapes only.   It is shinier than a diamond.  The hardness of Moissanite is 9.5 and the hardness of a diamond is 10.

Where Does Fraud Come In?

     A young man purchases a 14-karat gold engagement ring with Moissanite for $500. The salesman tells the buyer how great the material is.  So good, in fact that it looks and tests like a diamond.  But, it's Moissanite.  No fraud here.  The young man gives this gorgeous ring to his girlfriend.

     She takes the ring to a local jeweler for an appraisal to add it to her insurance policy.  The jeweler examines the ring.  He is very diligent and suspects the material.  As any good jeweler would do, he gets his handy-dandy diamond tester out and verifiers the material is diamond.  The jeweler finishes the appraisal and places the value of the ring at $5,000.  The actual retail value of the ring is $500.  Now an insurance company is falsely responsible for $4,500.

From Unknowing to Calculated...

    Let's take the young man from the above scenario.  Shortly after his purchase, he brags to some unsavory friends about this great ring.  He shares the attributes of Moissanite as told by the salesman.  The friends see great potential to make quick money.  They organize several people to purchase Moissanite rings and take them to unsuspecting jewelers.  Each jeweler believes the Moissanite to be a diamond.  Thirty to 60 days after the insurance policy is issued on the ring, a claim if filed for the policy limits.  I expect diamond fraud to soar.

On the Lookout...

     The first line of defense is to alert all agents and underwriters about Moissanite.  Advise them to be suspicious of any new single diamonds claimed.  Pay close attention to sizes ranging from .5 to 1.5 carats.   Initially, Moissanite will be offered in rounds only.  The stones will be set in four- and six-prong, Tiffany-Style, 14-karat gold mountings.  Agents and underwrites should be extra cautious when examining diamond claims from gold and silver stores or pawnbrokers without laboratory certificates.

     All appraisers should have state-of-the-art, independent laboratory reports done on the diamonds they test.  There is also a new electronic tester designed specifically for Moissanite.  It costs approximately $500 and is available through diamond dealers and jewelers. 

Source June 1998 issue of SIU awareness

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