(RAPAPORT) Evening Standard: Investors looking to make money through buying diamonds are increasingly at risk from con artists, experts warned today. The trade body that regulates the market said London is facing a spate of scams as investment in diamonds becomes more popular.
Hatton Garden-based London Diamond Bourse, which was set up in 1940 as a trade association to regulate the market, urged those thinking about investing to carry out extra checks. It said demand had moved from jewelry-buying to investing — just as gold had been a favorite — but that investors were at risk from a growing number of fraudsters.
Last year, four diamond dealers were jailed after making $1.7 million (GBP 1 million) by duping investors into buying stones at hugely inflated prices, using a "sucker list" to source unwitting victims, promising them sky-high returns.
Victoria McKay, the chief operating officer at the bourse, said, "Typically, diamond investment scams are where smoothtalking salespeople contact unwitting victims, cold-calling and promising low risk investments and huge returns.
''From time to time, Internet-based 'boiler rooms' surface, with a serviced office as a front. These are not bonafide, they cease trading and disappear leaving no trace of your money or diamonds.
"A good diamond dealer will be well established, know their market and be happy to be transparent."
Detective Chief Inspector Matthew Bradford, head of crime at the National Fraud Intelligence Bureau, operating at City police, said there have been reports of diamonds being marked up by 17 times their value. Officers are conducting a number of fraud investigations. He added, "The fraudsters take people's money on the promise of high investment returns, but the only people who gain are the criminals.
"I can only imagine how awful it must feel for people to discover the savings they've accumulated in their working lives have vanished overnight as a result of this despicable criminal activity."
The London Diamond Bourse recommends checking whether a seller is a member of the bourse or the World Federation of Diamond Bourses.
(c) 2014 Associated Newspapers Company