Ex-binary options scammers populate diamond investment scams.
The sales pitch is rather predictable. The price of gold is holding steady, the bitcoin craze might very well turn out to be a bubble. Are you looking to invest in a real commodity that never seems to suffer any loss? If so, why not consider diamonds? If you do, however, you may wind up a victim of diamond investment scams.
Internet websites offering investors a simple, online platform to reap huge profits in the diamond market have grown significantly. The idea is simple. First, send them the money you want to invest. Then wait for the price to go up. And at that point, you can (supposedly) sell the diamonds you bought. Or you can decide to hold on to your investment, whatever suits you. In reality, however, they will take your money and employ any one of a number of dishonest tactics to prevent you from recovering it or profiting from it.
Binary Options Veterans
According to published media reports, the rapid rise in the number of online diamond investment scams is due to the increasing number of countries that have banned fraudulent binary options sites. Rather than look for legitimate work, many veteran online binary options scammers simply re-packaged themselves as online diamond brokers (and online Forex brokers). These are professional criminals who employ heavy-handed telephone sales techniques. They have a long record of tricking countless numbers of unsuspecting individuals into sinking their hard-earned money into fraudulent online investment schemes.
Their aim is to entice those who have little or no experience in the diamond trade. They may say they’re offering you the opportunity to trade whole stones. Or fractions of a whole stone. Either way, they’ll say you can make a quick profit. Another ploy is to claim they can deliver a larger profit because they don’t work with middlemen. They will do their best to give you the impression that they really are honest businessmen. For example, they may tell you that none of the diamonds they deal in come from conflict zones, called blood diamonds. Of course, there are plenty of legitimate online diamond brokers who actually do meet the highest of professional standards. But all the phony ones are sure to claim they do as well. So how can you tell the difference?
France’s Diamond Investment Blacklist
In November 2016, the Autorité des Marchés Financiers (AMF) ̶ the independent French public authority responsible for protecting the safety of consumer financial investments ̶ blacklisted Blue Stone Ltd., a British-registered company also trading as BE-Diamonds. It was the first ever diamond investment firm to be labeled a likely fraud by a government agency. The AMF advised French consumers not to purchase gems from Blue Stone “in any form whatsoever.”
Since then, the AMF added approximately 80 more online diamond dealers to its blacklist. All have attempted to target the French public without complying with government regulations.
The AMF noted that these scams regularly change their URLs, so the list they published is not necessarily exhaustive or authoritative. Blue Stone Ltd., for example, has also maintained at least eight other URLs. (For the record, a number of legitimate diamond brokerages incorporate the words “blue” and “stone” into their names. They are unrelated to this particular company.)
The AMF warns investors not to respond to any inquiries that may be received from any company purporting to be marketing diamonds that is named on their blacklist and not to communicate with them or their affiliates “in any form whatsoever.”
How Can You Avoid Diamond Investment Scams?
Now that an official bilingual online list of phony diamond investment sites exists, check to make sure that the one you are considering doesn’t appear on it. But again, since that list is not and cannot be all inclusive, there are several other critical factors to consider:
- If you are “called cold,” or contacted out of the blue, either by phone or email, assume the worst
- Confirm that the brokerage has a business address in a city that is an acknowledged international hub for the diamond industry with strong local regulatory enforcement. These cities include Antwerp, New York, Mumbai, and Tel Aviv (or adjacent Ramat Gan).
- Check if the brokerage is a member of a reputable diamond industry association. Look for membership in the International Gemological Institute, the Gemological Institute of America, the Gemmological Association of Great Britain, the Asian Institute of Gemological Sciences, or the Antwerp Diamond High Council’s Institute of Gemmology (the spelling used here reflects each organization’s own usage)
Diamond Investment Scams Have Reached the U.S.
In September of 2020, South Florida federal prosecutors accused Jose Angel Aman of running a diamond investment Ponzi scam spanning four years. He managed to raise $25 million before his house of non-existent diamonds collapsed, and the feds came knocking at his door.If you think you’ve been the victim of a diamond investment scam, contact the fund recovery experts atMyChargeBack.