Dealer Holds $30M Diamond 'Hostage,' Suit Says

RAPAPORT... New York-based Global Diamond Group has refused to return a 30-carat pink diamond in an attempt to force the stone's majority owner into a buyoutdeal, according to a lawsuit.Global, which has the diamond on memo, held the stone"hostage" so that L.J. West Diamonds would buy its 15% stake in the diamond, L.J. West alleged in a June 14 filing at the Supreme Court of the State of NewYork. The diamond has a value of more than $30 million, according to L.J. West.Veteran diamantaire Larry West's two New York companies,L.J. West and Scottali Equity Partners, together bought the oval-cut,30.03-carat, fancy intense pink, VVS2-clarity stone in 2011. Shortly after thatpurchase, they sold 15% of the stone - known as the Juliet diamond - to Global,and another 10% to an independent dealer, court papers showed.Global asked to borrow the stone on consignment on May 22this year to show it to a potential buyer. Shortly after receiving the Juliet,Global told L.J. West its client was interested in buying it. L.J. Westrejected that purchase offer, saying the price was too low, but told Global itwas welcome to sell its 15% stake to the prospective customer at that rate,according to the suit.Global then asked L.J. West to buy out its 15% based on the per-carat price the client had offered for the stone. L.J. West refused to do so.On May 23, L.J. West demanded the diamond back in order toship it to the Luxury trade show in Las Vegas, where it had a customer,according to an email released as part of the lawsuit. Global refused to returnthe stone unless L.J. West bought out its 15% interest, according to the filing."By refusing to return the diamond to [the] plaintiffs asrequired by the memo, and by holding the diamond hostage to try to extract abuyout from [the] plaintiffs, [the] defendant has prevented [the] plaintiffsfrom showing the diamond to prospective customers, and is causing [the]plaintiffs irreparable harm," L.J. West alleged.Global believes L.J. West has an obligation either to sellits 75% interest in the stone at a price a prospective buyer offers, or to buyout Global's 15% stake at that price, L.J. West explained. L.J. West disagrees,saying it has no such obligation.Global, when it took the diamond on consignment, signed amemo contract that only granted it rights to examine and inspect the stone andshow it to potential buyers, L.J. West noted. Global was not entitled to sellthe stone, and was required to return it to L.J. West upon demand, the suitcontinued, citing the contract. Until the case that prompted the dispute,Global had taken the diamond on memo "roughly two dozen" times, and returned iteach time after showing it to potential customers, L.J. West said. It rarelykept the stone for more than 24 hours.L.J. West is asking the court to order Global to return thediamond and pay damages resulting from its refusal to send the stone back whenrequested, the suit continued. It has also asked the court to declare that L.J.West is not obligated to sell the diamond for a price it finds unacceptable, aswell as other damages.The stone is among the largest and most valuable coloreddiamonds currently on the market, L.J. West said. It went on display at the NaturalHistory Museum of Los Angeles County from December 2016 to March 2017, set in anecklace featuring marquise, pear and round white diamonds.Global was not available for comment at press time.Image: L.J. West Diamonds