Is it worth sending gems to the major labs?

[PinkDiamond]

I really feel bad for EGL USA, but unless they can reel in EGL International, the name is doing them more harm than good with the current lawsuits going.


EGL USA Calls RapNet Ban “Simply Wrong”
By Rob Bates, News Director - Posted on September 17, 2014

"It is “simply wrong” to ban EGL USA reports from the RapNet trading network, the lab’s directors tell JCK.

The leading diamond trading network is no longer accepting EGL reports on its service as of Oct. 1 because of concerns of varying standards at different EGL labs.

But EGL USA codirector Mitchell Jakubovic complains that his “respected lab” has no affiliation with the overseas EGLs, some of which are said to have lenient grading.

“[Martin] Rapaport has always distinguished EGL USA from other EGLs,” he says. “But in his press release, he lumped us all together.”

“The first EGL office in New York opened in 1977,” he continues. “We have built a strong reputation since then. All the problems have come up subsequent to our opening. As our reputation grew, we had others come in and try to benefit off that reputation…. We didn’t come into this confusion. We predated it.”

He notes that no other EGLs besides EGL USA have the right to issue reports in the United States, and that his lab has sought a customs ban against overseas EGL reports.

Lab codirector Jacob Tversky adds that, ..."

http://www.jckonline.com/2014/09/17/egl ... -306540353

[PinkDiamond]

Robert James of the ISG has revealed the truth about lab certs, and those of you who rely on them to sell your stones need to know you are responsible for what's on them; not the lab.


'Diamond Grading Report Costly Error
For those who still think diamond grading reports protect sellers and buyers...and insurers!

When you look closely at the two GIA Diamond Grading Reports below you will quickly notice that they carry the same number: GIA Report 16175691. Same date: May 30, 2007.

One was issued by the GIA in 2007. But the other one was issued by the GIA in 2013.

Everything on these two reports is the same with one exception: "E*". One GIA report lists the diamond as being natural color, while the other GIA report lists the diamond as being HPHT processed "to change its color". Here are the other factors.

Both certificates are authentic.

Both certificates were issued by the GIA.

The difference in these two certificates cost the sale of a $125,000.00 diamond.

These two certificates caused legal costs in excess of a reported $200,000.00.

The GIA walked away without paying a dime of the costs, and successfully avoided getting involved in the litigation in any way.

The seller lost the sale and their legal costs.

In 2013 this diamond was sold at auction by the seller based on representations made by the GIA Grading Report seen above left. The buyer purchased the diamond based on the information contained in the GIA Diamond Grading Report above left.

Later, the diamond was submitted to GIA once again but this time the GIA Diamond Grading Report came back saying the diamond was HPHT treated as seen above right. Same diamond: everyone agrees. But the GIA says they made a "typo" on the report in 2007 and reissued the report #16175691 in 2013, with the 2007 date still on it, and simply passed this off as a "typo". Here is the letter on PDF from the GIA explaining the situation and asking that the first report be returned and simply use the new one:

GIA Letter of Explanation http://www.schoolofgemology.com/GIALetter.pdf

Of course the problem is, a $125,000.00 sale was totally screwed up by this "typo", which for practical purposes I am going to call an "Error or Omission".

Now, what would you expect to happen to your business if you made an error that caused someone to lose a $125,000.00 sale? Litigation? Cause of Action for Damages?

Absolutely.

You know what happens when a major gem lab makes this kind of error on one of their grading reports that costs someone to lose a $125,000.00 sale?

Nothing.

When you or I make this kind of error we have to make it right. We have to pay for the error. But when a major gem lab makes this kind of error they simply hide behind their disclaimer on the back...and walk away.

What did the GIA do about this grievous error that caused the loss of a $125,000.00 diamond sale and generated close to $200,000.00 in legal fees?

They walked away without getting involved.

True story. I was retained as expert witness and got approval from the seller to share this story and the supporting documents after the case was settled.

Consumers and Jewelers

Sellers, buyers and insurance companies need to understand that these diamond grading reports from any lab in the world are simply sales tools. They are not legal documents and they do not stand up in court...mainly because the labs will not defend their grading reports in court.

Think I am kidding? Read the disclaimer on the back of that GIA Diamond Grading Report. They disallow any responsibility for any error.....even if their employee intentionally makes an error. Seriously!

Now, with that knowledge, who are you going to trust with your diamond grading: Some far off diamond grading lab with absolutely no responsibility for the accuracy of the report, or your local, home-town independent jeweler who is professionally trained and equipped to not only do their own diamond grading....but who will guarantee to you the accuracy of their grading?

The diamond industry is flawed. Severely flawed by the concept that these diamond grading reports are some sort of guarantee of accuracy in grading. They are nothing more than sales tools. If the facts were fully disclosed, the above case is likely far more prevalent in the market than we know.

If consumers want accurate grading in your diamond purchase, find a local, home town independent retail jeweler who can sit down with you and show you how diamonds are graded, and exactly how YOUR diamond grades out. Only your local, home town independent retail jeweler can offer you professional training and expertise, and will stand behind the accuracy of their grading both now and in the future.

In the end, both seller and buyer of the above case wish they had not relied on an outside diamond grading report to make their decision.

Consumers: Don't you get caught in the same problem. Seek out a professional, home town independent retail jeweler.

Its your only guarantee of accurate grading and fair pricing.

Jewelers: If you sell a diamond with a diamond grading report from any lab, you take on the legal liability for any error or omission that any employee of that lab makes....even if they do it on purpose

Any error. Any employee. Any diamond grading lab. Your liability and cost.

Think about that for a minute."

Robert James FGA, GG
President, ISG
Texas Department of Insurance P&C Adjuster #1300433
We welcome your comments, suggestions and feedback by clicking here: Contact the ISG.
http://www.schoolofgemology.com/Contact_the_ISG.html
To visit our Gemology/Appraisal education division click here: ISG
http://www.schoolofgemology.com/
To visit our Insurance Independent Adjusting and CE Education division click here:
http://www.jewelryadjuster.com/

[PinkDiamond]

More problems at GIA's lab. Apparently they have gotten so big that they subcontracted their sealing service they offer for diamonds out to another party, and somebody screwed up big time, so they've had to shut down the service.

Tsk tsk on them again. They should have kept it in-house, and maybe even had the cert printed and sealed by the grader right away. Duh!

Mislabeled Diamond Causes GIA to Suspend Sealing Service
By Rob Bates, News Director - Posted on November 3, 2014

"Gemological Institute of America’s lab has begun an investigation and suspended its diamond sealing service after it spotted a sealed diamond the report of which didn’t match the stone.

Diamond sealing—which involves putting the gem in a secure tamper-resistant package—is an additional service offered by the lab, generally for the investment market. Only one-tenth of one percent of the stones that the lab grades are sealed, says spokesman Stephen Morisseau.

When GIA was recently asked to double-check a sealed stone, it discovered that the gem did not match the grades and description on the accompanying label. GIA has enlisted a corporate investigator to examine the situation.

A statement adds clients with concerns about whether a sealed diamond matches the grade can submit their packets for a check to GIA free of charge.

The lab has also suspended its duplicate report service, which clients use to replace lost or stolen reports. The lab also offers Report Check, which shows grades online and allows clients to print PDFs of their reports, and some say it’s now redundant.

“There have been instances where stones have not matched the duplicate reports,” Morisseau says. “But that is not related to this sealing issue. The driver of suspending the duplicate reports is Report Check.”

Morisseau says no decision has been made as to whether the two services will be reinstated."

http://www.jckonline.com/2014/11/03/mis ... -306540353


I hope everyone is getting it, that these certs are merely sales tools that are useless to the buyer for any purpose because they can't be relied on, even for accuracy, so there's no point in wasting money on them.

You want someone to confirm what you bought that stands behind their work, so ask around until you find a local gemologist with a stellar reputation. Then you'll have something that can stand up in court if need be.

[PinkDiamond]

...and the saga continues....

EGL Int’l Is Not Going Away Quietly
By Rob Bates, News Director - Posted on December 19, 2014

"On Dec. 3, fresh off his appointment as the global manager of the EGL network, Menahem Sevdermish told me that EGL International was closing down. Later he walked that back a bit to National Jeweler. To understand why requires some background.

The EGL network operates via franchises. In Israel, there have been two franchisees: EGL Platinum, run by Sevdermish, and EGL International, owned and operated by Guy Benhamou. (EGL International was once known as EGL Israel.)

As JCK readers know, lately controversy has swirled around the EGL name and EGL International in particular. So founder Guy Margel’s heirs—who aren’t in the diamond business but claim ownership of the brand (except in the U.S., but we’ll get to that)—recruited Sevdermish to standardize the network’s grading. They also informed EGL International they were revoking its license. As they see it, Benhamou can still operate a lab, he just can’t call it an EGL.

But in the ensuing days a strange thing happened. EGL International’s website and Facebook page no longer use International, but rather call it EGL Gemological Laboratories, with Benhamou as CEO. And this week, Benhamou sent out a text to industry people with Hanukkah greetings from EGL Israel.

Yesterday, the EGL network sent out the following to members of the trade in Israel, hoping to make things clear:

The EGL trademark rights owners have informed the various organizations and institutions in the Israel diamond, gem, and jewelry industry and trade that on November 25, 2014, the licensing agreement with EGL managed by Mr. Guy Benhamou (also known as EGL International)…was canceled.

Upon termination of the licensing on November 25, 2014, EGL International is no longer authorized to issue and distribute diamond grading reports of any kind whatsoever bearing the trademark EGL and/or to represent the brand EGL. Each grading report issued by this laboratory after this date consequently is issued illegally, and the owners of the rights will deem this a forged document. Therefore, such a report is not to be considered as a reliable diamond grading report and people making use of such reports will do so at their own risk and may be at risk of various claims, with all the resulting legal implications.

Benhamou, however, wasn’t having it:

[Company name] EGL Eurogem has been the leading franchise in possession of the EGL Company trademark for over twenty years. The company is the legal franchise owner and will retain the right to use the EGL trademark for many years to come. The malicious notice that was publicized today came from interest groups with outsider motives who set for themselves a goal of causing damage to EGL and its operations. The company will continue to give high-standard professional service as it has done until now for its hundreds of customers.

Which led one of Margel’s heirs to call me to reiterate that the franchise has indeed been canceled. This may soon go to the lawyers.

If so, one hopes the issue is resolved quicker than the EGL case here in the United States. As it’s stressed in a series of statements, EGL USA stands independent from the rest of the network. In 2003, it asked the Customs Service to block other EGL reports from entering America, as it owns the brand name here. That helped sparked a court battle between EGL USA and the rest of the network, beginning in 2004. (The border ban is no longer under contention.)

The case went to a bench trial in July 2013, nine years after it started. It is now December 2014, and no ruling has been issued. While it is not uncommon to wait for a decision, there has been little word for 18 months (and counting).

Margel’s heir hopes to iron things out with the American lab. “We want to make sure that things are consistent for everybody,” he says. “Now it is not good for the business, and it is not good for the industry.” EGL USA, however, said it intends to remain independent: “We are not part of EGL International or any other EGL overseas entities, and we will never be part of their proposed network.”

One final point: Sevdermish feels there is some misunderstanding regarding the differences between the GIA grading scale and that used by the non-U.S. EGLs. While the EGL system does sometimes evaluate color faceup, he stresses that happens only with borderline calls. “Sometimes you turn the stone faceup and you get a better sense of how the color is distributed,” he explains. In the overwhelming majority of cases, the EGLs will grade color the traditional way. (That seems to differ from EGL International, which wrote in a statement that it puts “a great deal of emphasis on grading the color of the diamond faceup because that is how a diamond is seen when it is worn, whereas other labs attribute most of the color grade to the facedown position.”)

Sevdermish adds that the network will adhere to the GIA system, with two exceptions: It doesn’t list color grades past N, describing those grades as yellow and light yellow; and it uses an SI3 grade. He plans an article to further illuminate those differences. He also asserts, and many would agree, that several other labs don’t strictly follow the GIA scale.

Indeed, while the EGL saga has been grabbing most of the attention, the current controversy is starting to drag other grading services into the spotlight. EGL International may stay or go, but this issue shows every sign of hanging around."

http://www.jckonline.com/blogs/cutting- ... -306540353

[PinkDiamond]

Me thinks Rapaport is pushing his plan too far by attempting to make GIA the industry standard.

RapNet’s New Plan to Police Grading on Its Site
By Rob Bates, News Director - Posted on December 30, 2014

"Along with TV station WSMV and the Nashville class action bar, Martin Rapaport and his RapNet trading network deserve much credit for putting the issue of different lab grading standards front and center this year—even if not everyone liked how he went about it. Last week, his network announced an ambitious plan to maintain grading standards on its site—and it may prove just as controversial.

On Dec. 24, RapNet sent out a notice, credited to network chief operating officer Saville Stern stipulating the following:

Communication of diamond quality on RapNet is based on GIA grading standards. Members cannot use GIA terminology while applying non-GIA standards that overgrade diamonds…

“[O]vergraded diamonds” [are] defined as diamonds that are one color, clarity or fluorescence grade above the GIA verification grade.

Let us pause for a second to consider this seemingly new concept—the “GIA verification grade.” According to Rapaport, this means that if a grading dispute arises, the GIA lab will make the final call. This goes beyond calling the GIA scale the industry standard. It establishes the GIA lab as the final arbiter.

Rapaport argues that courts regularly accept GIA grades, so why shouldn’t he?

“The GIA owns the system,” he says. “If we are grading according to GIA, they are the keeper of the standard.”

That said, the network won’t police diamond grades, but if a member files for a dispute, that is how it will be resolved.

The notice also says:

Members listing over-graded diamonds…may be subject to suspension with full public disclosure of their name and the reason for their suspension…

Buyers may require sellers to cancel transactions, accept return of the diamond and provide a full refund in the event they are sold over-graded diamonds.

This means that traders now need to stand behind the grades they post on the network, even if they came from a lab.

“You the seller are responsible for what you sell,” Rapaport says. “If Christie’s sells a fancy pink, and it turns out it is treated and it wasn’t disclosed, Christie’s has to take responsibility for that. It’s the same here. [Overgrading] is misrepresentation, no different than listing a synthetic as natural.”

The notice continues:

RapNet does not support the marketing of diamonds using EGL grading reports. Members that market diamonds on RapNet using EGL reports are subject to suspension. We remind members that under the terms of our license agreement and privacy policy, RapNet cooperates with requests from law enforcement and court subpoenas for information regarding sellers…

Two points here. While it’s no suprise the network will honor court requests, I wondered why that point was juxtaposed with the notice reiterating the ban on EGLs. Rapaport says this was done in case class action suits are filed targeting reports from certain EGL-branded labs. “We want people to know we will give the court the information,” he says.

Second, there have been ongoing murmurs that diamonds with EGL reports continue to be listed on RapNet, despite the Oct. 31 ban. From what I hear, it is now customary to list the diamond without reports and then include the EGL name in the comments.

One member sent me as an example the following screenshot, which shows a stone with an EGL Israel report, as an example:

Rapaport doesn’t deny this happens.

“I am for free speech,” he says. “People can write whatever they want. I am not going to stop a stone being listed based on the comments, as long as there is no misrepresentation.

“This is not about EGL. It is about the honesty and integrity of RapNet members,” he continues. “Today, they call the lab EGL. Tomorrow they might call the lab something else. This fundamentally needs to be dealt with.”

“When you overgrade, you are poisoning the well of the industry,” he continues. “If you list a diamond as an F based on its report, and it’s a K, that is not acceptable behavior on RapNet. Like we say don’t sell Marange diamonds. You can sell them in India but not on RapNet. That is the whole idea of having a trading network. We want sellers held to a higher standard.” "

Article with sublinks here:
http://www.jckonline.com/blogs/cutting- ... -306540353

[PinkDiamond]

GIA Changing Colored Stone, Pearl Reports
By Rob Bates, News Director - Posted on January 29, 2015

"Gemological Institute of America has tweaked its colored stone and pearl reports, adding better imagery and more information geared toward consumers.

Beginning Feb. 1, GIA will issue the same form report for both colored stones and pearls, although the reports will still list information specific only to those gems.

Other changes include:

- The colored stone and pearl reports will use a portrait-orientation layout.

- New paper will support better-quality photos on the reports.

- On its online Report Check, the documents for treated colored stones and pearls will lead readers to consumer-friendly information about any treatments they have undergone.

- Diamond reports on Report Check will feature plots and proportion diagrams."


http://www.jckonline.com/2015/01/29/gia ... -306540353

[PinkDiamond]

Looks like things are going to get interesting with EGL International.


Reports From Former EGL International Are “Counterfeits,” Says EGL Network
By Rob Bates, News Director - Posted on February 9, 2015

"
The European Gemological Laboratory (EGL) civil war has intensified, with the EGL network calling any new reports issued by the former EGL International “counterfeits.”

“On Nov. 25, the license agreement with the gemological laboratory operated by Mr. Guy Benhamou, a former EGL laboratory that also uses the name EGL International…was revoked and canceled,” said a Feb. 8 statement to the press, attributed to the “EGL trademark holders,” which includes heirs of late lab founder Guy Margel.

“This lab is not authorized to issue certificates bearing the EGL trademark in any form,” the statement continued. “Any certificate issued by this laboratory, including certificates bearing the name EGL INTERNATIONAL and/or the Internet address eglreports.org after [Nov. 25], is therefore a counterfeit report.… The EGL trademark rights owners reserve the right to prosecute anyone who makes use of such reports.”

The statement said the trademark holders have applied to the courts to dissolve Benhamou’s lab.

“Benhamou, while a minority shareholder, has taken control of the company and acts without their approval,” the statement said.

In December, the EGL network appointed Menahem Sevdermish its new global manager. He told JCK that EGL International would soon shut down.

But it hasn’t worked out that way, and in a statement, Benhamou slammed the initial notice as “deceitful.”

“Our company has a long-term franchise agreement with EGL International to issue certificates in its name up until the year 2020 (with an option to extend the agreement for ten more years),” it said. “This is a valid agreement which has never been nullified and continues to obligate both parties…to its terms and clauses.”

“Our company is authorized, without restrictions, conditions or prohibitions, to issue certificates under the name of EGL, as it has done for the past 22 years,” Benhamou continued. “Our company has met and continues to meet all the financial and professional franchise terms and conditions.”

The Benhamou statement added that threatening the lab’s customers “merits total condemnation.”

“These groups which attempt to harass us incessantly have failed in all their attempts,” it said. “[They] have realized that our laboratory is the most reliable and professional in the eyes of our all our clients.”

The statement says that no court case has been filed to dissolve the lab.

Last year, a local TV station criticized EGL International’s reports for alleged overgrading. The furor led RapNet to ban all EGL reports from its network, and Polygon to ban EGL International reports.

New York City–based EGL USA remains an independent lab from the EGL network."

http://www.jckonline.com/2015/02/09/rep ... -306540353


*The Labs thread is now moved from the old forum.

[PinkDiamond]

Well this is interesting. A court put the lid on the EGL controversy, ruling that neither side won.

EGL Court Fight Ends in a Draw
Rob Bates | November 9, 2015

"The decade-long court fight between EGL USA and the global European Gemological Laboratory network has ended with both sides losing.

In September, more than two years after the bench trial ended, New York federal Judge Paul A. Crotty issued a ruling that denied motions from both parties.

The court case began in 2004 and has seen several notable twists and turns during its 11-year odyssey through the court system, including the death of EGL founder Guy Margel in 2012.

The European Gemological Laboratory network and Margel first filed suit against EGL USA in February 2004, claiming breach of contract related to royalties stemming from the two sides’ 1986 licensing agreement. In his ruling, Crotty denied that claim, saying the network failed to prove a breach occurred.

(In its original filing, the overseas EGL network also disputed EGL USA’s attempt to enforce a border ban that would prevent other EGL reports from entering the United States. It eventually dropped those claims.)

EGL USA also countersued, charging that overseas EGLs were soliciting and doing business in the United States, despite EGL USA’s exclusive American rights to the EGL mark. It contended that the overseas’ network’s “inferior” product tarnished its reputation.

But Crotty ruled that “[the global network’s] use of their own trademarks on grading certificates produced outside the United States is in good faith. That these certificates ultimately make their way into the United States where they may conflict with Defendants’ certificates cannot form the basis of a Lanham act violation.”

He further noted there was little chance of “confusion” over the two marks. While the overseas network did run some U.S. trade ..."
http://www.jckonline.com/2015/11/09/egl ... -306540353