Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Moderators: PinkDiamond, John

Post Reply
User avatar
PinkDiamond
Posts: 15409
Joined: Thu Jun 04, 2015 9:30 pm
Location: Ozark Mountains

Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Post by PinkDiamond »

How interesting .... How much would you guesstimate GIA takes in as a public charity? I wasn't aware they claimed that status and wonder how they're able to maintain it after reading this. :roll:

Image
Insurance Institute of Jewelry Appraisal Inc. July 3, 2019

Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?
Investigating the financial benefits that give the GIA Gem Lab unfair advantage

For those about to receive your printed edition of my book, “GOBSMACKED! Exposing the dark side of the international gemstone industry,” you will read a section on why the Tibet andesine fiasco lasted so long when there was so much independent scientific evidence against it. Based on many years of litigation investigations, my experience is the thing was not prolonged by either of the television shopping channels. As a named party to the litigation with access to all documents and affidavits, it was and is my experience that the whole Tibet andesine fraud was prolonged because the GIA and members of the former AGTA Gem Trade Lab were trying to protect their reputations at the expense of truth and facts. In doing so, the GIA greatly benefited the television shopping channels and Andegem, allowing outside organizations to influence and benefit from the actions of the GIA. An admission that no copper-bearing andesine mine exists in Tibet would mean the AGTA GTC and GIA GTL each committed gross misconduct in their fiduciary duty to “serve the public interest” by issuing gemstone identification reports that were blatantly wrong and failing to act to correct the errors.

Here is the problem facing the GIA today; it is designated by the IRS as a public charity. The GIA enjoys the rights and privileges of being designated as a 501(c)3 Non-Profit Charity but also has the legal responsibility to serve the public interest. To quote directly from the IRS Compliance Guide:

IRS Compliance Guide for 501(c)(3)

Public Charities

Private Benefit and Inurement

“A public charity is prohibited from allowing more than an insubstantial accrual of private benefit to individuals or organizations. This restriction is to ensure that a tax-exempt organization serves a public interest, not a private one. If a private benefit is more than incidental, it could jeopardize the organization’s tax-exempt status.”

By law, the financial records of all 501(c)3 Non-Profit organizations are public record. If we look at the GIA income records, they offer an insight into why this organization worked so hard to protect their financial interests:

From the IRS Website of Non-Profits

GEMOLOGICAL INSTITUTE OF AMERICA INC
Annual Income 2017: $317,476,873.00 (yes, almost a third of a billion dollars per year)
Assets as of 2017: $580,020,223.00 (over half a billion dollars in assets)

These numbers are from the public records of the US Internal Revenue Service. The GIA income is over $300 million dollars in 2017 alone. These numbers are astounding when one considers that this is tax-free income.

Applying the IRS Rules to the GIA

Here is the problem for the GIA; they are raking in over a third of a billion tax-free dollars a year, and it is reported that most of the income is from the GIA identification and grading reports. The problem is obvious; the GIA is able to overwhelm competing gem labs because the other labs have to pay income taxes. The GIA can generate millions of dollars through their gem lab and not pay one cent of income tax, allowing them to compete unfairly in the market. The GIA Gem Lab is not a charity. The GIA education division is a charity. They should be separated.

This is unlikely without IRS intervention, however, since hundreds of millions of dollars in tax-free income are at stake for the GIA. The GIA already takes steps to protect this cash cow:

* The GIA has the small print on the back of their certificates that says they are not responsible for any error, even if the GIA grader makes the mistake on purpose.
* The GIA refuses to show up in court to protect their certificate when errors are found. As an expert witness in certain of these cases, the GIA appears to show up after the litigation is over with a payment that includes a confidentiality clause that induces the plaintiff to keep quiet.
* The GIA goes to great lengths to maintain support and publication of proven hoax expedition reports of Tibet andesine in an effort to provide “…private benefit to individuals or organizations.,” to those the GIA wants to materially assist.

On the last point, independent scientific testing of the specimens returned by the GIA-led expeditions proved the specimens were treated, but to this day the GIA refuses to admit the hoax or that the reports of Dr. Abduriyim were false. Instead, the GIA hired Abduriyim who now works for the GIA.

$300+ million dollars in tax-free annual income can certainly create an impetus for this kind of behavior. Having studied with him, I believe Richard T. Liddicoat Jr. would not be happy with what has become of his Gemological Institute of America.

Conclusion

After years of investigation, litigation and serving as an expert witness in cases involving the Gemological Institute of America, it is my conclusion that the GIA wrongly uses their status as a 501(c)3 Non-Profit to generate huge financial resources that they apply to overwhelm and control all competition in the industry. The GIA Gem Lab should be separated from the GIA education division. The GIA Gem Lab should not qualify as a non-profit organization as the historical record shows that they do not perform or act like a non-profit organization based on the IRS Compliance Guide for 501(c)(3).

The GIA Gem Lab enjoys an unfair industry advantage that quashes competition because of its tax-exempt status and the enormous financial resources that the status generates.

$300+ million in annual tax-free income. Remember that number when you buy or sell a diamond with a GIA Grading Report.

It is my further conclusion that the GIA has failed in its fiduciary duty as a non-profit charity. Specifically, they have failed: “…to ensure that a tax-exempt organization serves a public interest, not a private one.”

The Cornell Law School defines “fiduciary duty” this way:

“Corporations and Fiduciary Duties

Directors of corporations, in fulfilling their managerial responsibilities, are charged with certain fiduciary duties. The primary duties are the duty of care and the duty of loyalty.”


The IRS says that care and loyalty should be in the public interest. The question here is where the GIA care and loyalty lies, the public interest, or their own tax-free income interests?

Should the GIA Gem Lab enjoy non-profit status?

Perhaps the IRS should be the one to answer that one.

Robert James FGA, GG
Insurance Institute of Jewelry Appraisal Inc.
a 501(c)3 Non-Profit Organization 2017 Income: $136,916.00 Assets: $38,402

You can read this editorial on PDF file by downloading here: https://instituteofappraisal.com/Should ... Status.pdf
To learn more about the Insurance Institute of Jewelry Appraisal, please click below.
https://instituteofappraisal.com

©2019 Insurance Institute of Jewelry Appraisal Inc. ALL RIGHTS RESERVED. We encourage sharing and caring throughout the industry as long as all copyrights are left intact.

IIJA
Insurance Institute of Jewelry Appraisal Inc.
PO Box 1727
Helotes, TX 78023
PinkDiamond
ISG Registered Gemologist


· ´¨¨)) -:¦:-¸.·´ .·´¨¨))
((¸¸.·´ ..·´ There are miracles left for you to do .... -:¦:- -:¦:-
-:¦:- ((¸¸.·´* It all begins inside of you. ;)
User avatar
SwordfishMining
Posts: 4216
Joined: Fri Jun 05, 2015 3:06 pm
Location: Denio, NV USA
Contact:

Re: Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Post by SwordfishMining »

I'm Gobsmacked that the GIA was a non profit instead of a business?
I'll jump over my shadow. https://www.virginvalleyopal.com"
Opals & more at my ESTY store https://swordfishmining.etsy.com"
User avatar
PinkDiamond
Posts: 15409
Joined: Thu Jun 04, 2015 9:30 pm
Location: Ozark Mountains

Re: Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Post by PinkDiamond »

I'm afraid so, John, and I think it will surprise quite a few folks who didn't get their degree from GIA because I've not noticed that mentioned on their site, although I wasn't expecting to see it so I could have easily overlooked it. I've never seen anything about them asking for donations, either, so finding that out was quite a revelation to me. :?
PinkDiamond
ISG Registered Gemologist


· ´¨¨)) -:¦:-¸.·´ .·´¨¨))
((¸¸.·´ ..·´ There are miracles left for you to do .... -:¦:- -:¦:-
-:¦:- ((¸¸.·´* It all begins inside of you. ;)
User avatar
rocks2dust
Posts: 742
Joined: Thu Jun 11, 2015 5:41 pm
Location: Oregon
Contact:

Re: Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Post by rocks2dust »

I'm not so surprised that the GIA is a 501(c)3 as I am that they've managed to accumulate half a billion $ in assets while raking in $300 million per year. Unfortunately, nothing prevents a 501(c)3 from operating like other businesses, so long as their tax attorneys file the right paperwork and report even the most thinly veiled "public benefit." I wonder what the top people there are being paid?
r2d

surplus odds and ends that I have on ebid.net
· Xtra gemstones
· Xcess fossils, minerals and rough
· Everything else
User avatar
PinkDiamond
Posts: 15409
Joined: Thu Jun 04, 2015 9:30 pm
Location: Ozark Mountains

Re: Editorial: Should the GIA Gem Lab Enjoy Non-Profit Status?

Post by PinkDiamond »

Yes, good question, and now you've got me wondering how much those who were around those taking part in the scamdesine fiasco and were privy to it got paid to keep their mouths shut.... :o Image
PinkDiamond
ISG Registered Gemologist


· ´¨¨)) -:¦:-¸.·´ .·´¨¨))
((¸¸.·´ ..·´ There are miracles left for you to do .... -:¦:- -:¦:-
-:¦:- ((¸¸.·´* It all begins inside of you. ;)
Post Reply