Diamond thieves know loot is too hot to hold

Aaron Aupperlee
| Saturday, June 22, 2013, 12:01 a.m.

Those in the business of stealing diamonds typically do not marvel at their bling for long.

Diamond thieves dump stolen goods to fences or shady dealers soon after a heist, law enforcement and market experts said, and 95 percent of them are never recovered. The hot diamonds can change hands several times, have laser-inscribed tracking numbers polished away or be recut and reset before re-entering the legitimate market again.

“It isn't that easy. You have to set it up,” said John J. Kennedy, president of the Jewelers' Security Alliance, a New York trade association that tracks crimes against jewelers. “After they get the goods, they try to pass it off immediately to someone else.”

Local police and the FBI continue to investigate three recent high-value diamond and jewelry robberies in Allegheny County. Authorities do not know who orchestrated the heists, but Kennedy and federal law enforcement officials said they resemble those that South American gangs have committed across the country.

The gangs stake out a traveling salesperson or dealer, follow them for miles and attack, snatching hundreds of thousands, if not millions, of dollars in diamonds and jewelry.

Thieves sell at a discount — 10 cents to 20 cents on the dollar — Kennedy said. The thieves often set up the transactions before committing the crimes. The diamonds move through a network of independent dealers and jewelers and potentially end up in store display cases, he said.

Kennedy recalled a case of a jewelry dealer from Queens, N.Y., who traveled to cities where salespeople were robbed and bought the stolen diamonds and jewelry days after the thefts.

“There are bad apples in every industry,” he said.

Diamonds are unique and have “a certain DNA,” said FBI Special Agent Eric Ives, former head of the bureau's Major Theft Program and a veteran of several interstate diamond heist investigations. But jewelers can strip away a diamond's identity. Laser-inscribed serial numbers are polished off. Diamonds are recut and reset to change their cut, clarity and carat weight, characteristics diamond labs use to register and index stones, Ives said.

Police rarely track down stolen diamonds. Only 4.6 percent of the $1.78 billion in jewelry and precious metals stolen in 2011 were recovered, the FBI reported last year. For an industry that raked in about $65 billion in 2011, stolen jewelry represents a small portion of the market, Kennedy said.

Stolen diamonds will not end up in the plush display cases of major chain jewelry stores and high-end boutiques. Those retailers purchase diamonds either straight from mining companies or from vendors representing major mines, said Fred Cuellar, CEO of Diamond Cutters International, a diamond house in Houston.

The potential market for stolen diamonds lies among the smaller, independent, “mom and pop” jewelry stores, Cuellar said. These shops buy diamonds from pawn shops, people who walk in with jewelry to sell or from traveling salespeople.

“I don't know that I would be concerned that, ‘Gee whiz, my diamond might be stolen if I buy from a mom and pop store.' That's not fair,” Cuellar said. “But they don't have the same rules and regulations of say, the big chain.”

Agencies and organizations, such as The Jewelers Board of Trade, vet and rank jewelers and dealers in the industry, Cuellar said. The Jewelers Vigilance Committee formed in 1917 to help the industry self-regulate and adhere to a high standard of ethics.

Western Pennsylvania law enforcement agencies have pawn rules requiring shop owners to copy and submit information and photographs of the seller and the piece of jewelry to police and hold the purchase for a number of days while officers check whether it was reported stolen. In Pittsburgh, shop owners must wait 30 days. In surrounding counties, the wait is five days. Independent shops approach buying from walk-ins or dealers with caution.

“When we're purchasing from someone, it's as an important a transaction as if we're selling to someone,” said John Henne, owner of Henne Jewelers in Shadyside. “It really becomes a conversation.”

A member of Henne's staff will take the prospective seller into a private room and talk to them about the piece of jewelry, who wore it and why they are selling. It weeds out crooked sellers, who rarely come into his shop, Henne said.

Mark Hensler, owner of the Alle­gheny Diamond Mine in Cranberry, will not buy a large quantity of jewelry from someone he does not know.

“When you purchase diamonds and gold from the public, there's always the possibility that your purchase could be confiscated by the district attorney as evidence. You're taking a risk every time,” Hensler said. “A part of it is feel. If things don't make sense, we don't purchase.”

Aaron Aupperlee is a staff writer for Trib Total Media. He can be reached at 412-320-7986 or aaupperlee@tribweb.com.

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