Trade 'Blind to Diamond-Swapping Threat'

RAPAPORT... Diamond dealers are failing to protect themselves against stone-swapping,and are instead waiting until an expensive loss occurs before taking action, equipmentsuppliers have warned. The switching of natural diamonds with synthetics or otherlower-value goods is a common phenomenon to which many traders are oblivious,said Dror Yehuda, president of Israel-based Yehuda Diamond Company. Thatcompany makes the Sherlock Holmes scanner, which detects laboratory-grown diamondscreated using both chemical vapor deposition (CVD) and the High Pressure-HighTemperature (HPHT) technique. When an Israeli trader recently became the victim of adiamond-swapping case, it was the Sherlock Holmes scanner that spotted the synthetics,Yehuda said. Following the incident, which involved 3- to 5-carat diamonds, theIsrael Diamond Exchange stripped two people of their bourse membership andreported the theft to the police, as reported by Rapaport News on August 5. Waiting for trouble "They buy the machine after it's happened to them," Yehuda said."Every week, people come, and we check [the diamonds] for them. Every week, wediscover [synthetic] diamonds in jewelry and parcels - maybe four times aweek." In the past, by placing a diamond on a scale to check thatthe weight was exactly what it should be, dealers could confirm that noswitching had taken place. However, fraudsters are now using synthetics thatmatch a natural diamond's characteristics, enabling them to carry out a switch thatcan get past that type of test. Thieves sometimes recut lab-grown diamonds sothey closely match the 4Cs of the natural stone they intend to swap it with,Yehuda explained. The day-to-day solution is to scan diamonds before showingthem to a potential client, and again when returning the goods to the safe,Yehuda advised. That ensures that any swapping will not go unnoticed. Awareness mattersBeing aware of what thieves might be up to is also criticalfor minimizing losses. That applies even when dealing with people whom onetrusts, said Donald Palmieri, president of the New York-based Gem Certificationand Assurance Lab (GCAL). While few details are available about the incident atthe Israeli exchange, the fact that the victim and the culprits were bothbourse members suggests there was probably a degree of trust between them,Palmieri speculated. "How two stones were able to be switched was distraction -maybe by being on a phone call," he said. "There can be any number of reasons.The most important thing though would be heightened awareness." Real-time checks are best, as thieves can switch a diamondin an instant and remove a laser girdle inscription in five seconds, Palmierinoted. Possible solutions include keeping a contraption on the desk that givesoff ultra-violet (UV) light, to give dealers an idea of whether a stone issynthetic while they're still with the client. Lab-grown diamonds do notgenerally emit blue light under a UV lamp, while their natural counterpartsoften do. The cost of security However, sometimes dealers just need to spend money onexpensive equipment - something they are too often unwilling to do, Palmierinoted. Palmieri has a vested interest in the matter, as GCAL owns Gemprint,whose technology places a unique "fingerprint" on each stone, making swappingalmost impossible. Equipment suppliers argue that while the best machines cost thousands or tens of thousands of dollars, the diamonds in the recent Israeliswapping case were worth hundreds of thousands of dollars. "A lot of people still want to hold on to the handshakeapproach," Palmieri said. However, with thieves becoming cleverer and betterconnected, that might not remain true for long.