Robert James goes over the issues in this editorial, and offers a reward to anyone who would care to try to prove him wrong. Read on ...
a 501(c)3 Non-Profit Education Organization
6 October 2017
Editorial: Lawyers Gone Wild!
"GIA Madness" has infected the US legal system
Whenever the name: "GIA" is mentioned in this industry the room gets quiet, gemologists bow down, most of the media publishers pay blind and submissive homage that borders on what I call "GIA Madness". Most recently, a new group has come under the GIA "Spell" and we have Lawyers Gone Wild.
The "GIA Spell": A multi-million dollar public relations campaign where the GIA has set themselves up the "Official Gemology School" according to their own advertising that I have published previously. The facade has been built so beautifully and intricately that industry perception is that the GIA is some kind of legally official entity that sets the standards by which the diamond industry must operate.
The problem, of course, is the "Spell" is total bull crap.
The whole concept of the GIA as having some kind of legally binding standards by which the industry must operate is false. More than that, the idea that the GIA has any kind of formal grading standards AT ALL is a fabrication. Yet, once again the US legal system has attached a full blown legal action against a diamond group in the industry, this time the IGI, and accused them of committing heinous fraud for not following "GIA Standards."
The situation has gone so far as to potentially include the world's largest diamond sellers, Costco and Walmart in what could be a devastating blow to the world diamond industry.
What we truly have is Lawyers Gone Wild, and the latest story is beautifully told by Chaim Even-Zohar in the latest edition of the Diamond Intelligence Briefing seen above. You can click the cover image above to get a copy of this and I promise you it will be well worth the effort.
The situation from an insurance investigators view
Looking at the developments of yet another case of Lawyers Gone Wild against the diamond industry, as an insurance Special Investigations Unit (SIU) investigator I have to look at this and previous cases to understand the motivation. Clearly, litigation of this kind has the potential of totally destroying yet another major gem lab over frivolous claims based on nonexistent industry standards. This is a New York diamond dealer filing massive lawsuits against IGI and many people they do business with. I have to wonder: Why?
Having been involved in litigation involving the GIA and actions taken based on the "GIA Standards," there are two names that always seem to surface: GIA and Martin Rapaport. The "Partners"...I should add: GIA and Martin Rapaport.
It is a fact that Martin Rapaport virtually destroyed much of the European Gemological Lab business when he attacked and erased EGL lab reports from RapNet listing, only to open his own Rapaport diamond grading lab. By unilaterally using his power over the diamond industry to destroy EGL, he cleared the field of a major competitor of his new diamond grading lab and his partner, the GIA. Furthermore, he used the unfounded and false claims of a "GIA Grading Standard" as the basis for the destruction of the EGL.
The question must be raised: Is the legal attack against the IGI, using the same failed argument of previous litigations, also an effort to clear the playing field of yet another competitor (read: threat) to the Rapaport / GIA monolithic control of the diamond industry?
As an insurance adjuster, if I were adjusting the E&O Claim for IGI, I would be asking this question and demanding answers.
If we look at the legal records, the previous litigations are based on claims of a "GIA Standard" for diamond grading. The problem is, not one lawyer and not one witness has been able to actually produce a legally binding copy of the "GIA Standards" on which these litigations are based. Why?
$1000.00 REWARD for a legally binding copy of "GIA Standards"!
REWARD: I will pay US$1000.00 to anyone who can put a copy of the formal, legally binding GIA Diamond Grading Standards that IGI must adhere to on my desk.
I challenge anyone out there, with a $1000.00 reward, to give me a legally binding copy of GIA Diamond Grading Standards.
And yes, I am already planning on where to spend that $1000.00 because I know it cannot and will not be done.
Someone needs to tell the IGI lawyers that fact. The whole lawsuit against the IGI is based on claims of variances from GIA Grading Standards, ("over-grading: is the term used), and not one lawyer....no matter how wild (read: mad) they have gone...can do that.
If they do, I have 10 US$100 bills on my desk waiting.
Conclusion
In the litigation at hand, lawyers from the Morrison Cohen LLP law firm, on behalf of plaintiff KS Trade LLC, have accused IGI, et al... of:
"...a fraudulent scheme to manipulate the IGI Group's evaluations of diamonds.....to illicit profit for themselves.....with the intentional and systematic over-grading of diamonds...."
I am not a lawyer, but as a Property and Casualty Insurance Adjuster licensed to handle business insurance claims by the Texas Department of Insurance, my questions to attorneys Sharf and Brooks are as follows:
1- Over-graded compared to what?
2- What legally binding standard governs how IGI grades their diamonds?
3- Can you produce a legally binding GIA diamond grading standard that IGI is required to follow, by New York or Federal Statute?
As all good lawyers will tell you (and I know a lot of really good lawyers) never ask a question that you don't already know the answer. In the case of KS Trade LLC -v- IGI, et al....the legal case of Morrison Cohen LLP is frivolous. Baseless. Without merit. The reason is that the crux of their case is "over-grading" of diamonds.
My final question to Attorneys Sharf and Brooks: After accusing IGI of fraud based on "over-grading" of diamonds, I ask you..."over-grading" compared to what legal standard?
If you cannot provide an answer to that, you should lose this case. Accusing the IGI of fraud without a standard to establish elements of fraud.....really guys, have you gone.....wild?
If anyone out there is in the diamond business on any level, you need to read Chaim's article. It may foretell the future of the diamond business with more Lawyers Gone Wild certainly waiting in the wings to cash in.
Robert James FGA, GG
President, International School of Gemology
a 501(c)3 Non-Profit Education Organization dedicated to the future of this industry
This editorial is available in the World Gem Society Archives, a part of the International School of Gemology Inc.
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