21, Dec 2023
Good cash after dangerous: 4 charged in cold-call diamond sale scheme prosecutors say was a blinding rip-off

It was a pitch designed to dazzle: flip a small funding in pink diamonds into massive bucks by getting forward of a serious purchaser making an attempt to nook the market.

However prosecutors say it was little greater than a boiler room scheme that satisfied traders to maintain sending cash to purchase stones which will by no means have existed within the first place.

4 Canadian diamond sellers have been charged with allegedly operating a strong-arm, cold-call rip-off that cheated dozens of US traders out of tens of hundreds of {dollars} every with guarantees of massive returns on treasured stones.

In response to courtroom paperwork filed in federal courtroom in Ohio late final week, James Gagliardini, 44, Michael Shumak, 52, Anthony Palazzolo, 64, and Jack Kronis, 63, ran Paragon Worldwide Wealth Administration from 2013 till 2018 out of workplaces in Toronto, Canada. The agency billed itself as an skilled in shopping for and investing in so-called “coloured diamonds.”

All 4 males have been charged with one rely of wire fraud however arrest warrants had not but been issued, prosecutors mentioned.

Messages left for attorneys representing Gagliardini, Shumak and Palazzolo weren’t instantly returned. It wasn’t instantly clear if Kronis had but retained an lawyer and he could not instantly be reached.

Prosecutors say the agency began by buying telemarketing lists of potential prospects within the US and Canada and the 4 males, typically utilizing aliases, would cold-call them and aggressively pitch their diamond funding scheme.

At first, the supply was modest — for an preliminary funding of as little as $700 to $800, the client would purchase shares in a pool of small pink-colored diamonds that would later be offered for a revenue. Paragon would typically even ship the investor an precise pink diamond with an appraiser’s certificates indicating its worth as a present of fine religion.

However that is when prosecutors say the scheme would kick in. Ultimately the agency would contact the consumers and inform them of a deep-pocketed Hong Kong purchaser who was in search of to nook the pink diamond market. They mentioned he would purchase their diamonds in the event that they spent extra to buy bigger ones.

Prosecutors say dozens of purchasers from everywhere in the United States agreed to the deal, sending tens of hundreds of {dollars} extra to accumulate the supposedly bigger diamonds. However the deal by no means went previous this level, in response to courtroom paperwork, with the defendants telling their purchasers that the Hong Kong purchaser both was unable to purchase the diamonds on account of monetary difficulties, or had paid with yellow diamonds.

The defendants then allegedly informed some prospects that the yellow diamonds may very well be offered at public sale in the event that they spent extra to have them set into items of bijou. A number of agreed to pay hundreds of {dollars} extra to have the diamonds made into jewellery solely to later be informed that the items didn’t promote at public sale as they hadn’t met their reserve value.

As a part of the rip-off, the defendants typically despatched prospects phony appraisal certificates that inflated the worth of the diamonds they’d purportedly invested in, prosecutors mentioned.

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