More on the GIA Grading Scandal

More on the GIA Grading Scandal

Category:

Diamonds

We reported on the scandal of the GIA Gem Trade Laboratory being hacked, and more than one thousand diamond grading reports being altered in October. The Times of India has reported that “The GIA has suspended 14 diamond firms from Surat out of the total 19 firms for hacking GIA’s computer database and upgrading the diamond grading reports to pocket Rs 77 crore from the gullible diamond consumers in India and around the world. These diamond firms hacked into the GIA’s computer database, maintained by a top IT firm, and upgraded their 1,042 low quality diamonds by altering the original diamond grading reports.”

FBI Corruption Investigation arrests 44 individuals in 2009Obviously this is a major scandal which needs to be investigated thoroughly. It appears that a number of companies in India, went to the trouble and associated risk of teaming together with a group of hackers, in order to change the grade of the diamonds which they submitted to the GIA Gem Trade Laboratory for grading. A total of 1,042 diamonds seem to have been ‘upgraded’ by one color and/or clarity grade. While this tragedy might have occurred in India, the fact is that many diamond companies have offices located in the United States, and the main offices of the GIA are located in Carlsbad, California.

Perhaps this matter is being, and should be, investigated by our own Federal Bureau of Investigation since it involves U.S. companies and affects U.S. citizens. This photograph shows the FBI arresting 44 individuals, including mayors, rabbis, state legislators, and numerous political operatives, in a two-track multi-agency investigation into public corruption and money laundering rings in July of 2009.

While 1,042 diamonds, submitted over a period of many months, might seem like a drop in the ocean of GIA-graded diamonds, I’d like to put this in perspective. Improving the color and clarity grade of a diamond one level like this, probably generated an extra 20% of profit, multiply this by 1,042 diamonds and we’re talking about a pretty large chunk of change!

Clearly the perpetrators took into consideration the fact that a difference of one clarity or color grade was unlikely to raise much suspicion. Since an independent appraiser who might be hired to verify the characteristics of the diamond might decide that the difference in clarity and color was simply a difference of opinion. This subtle approach to improving the clarity and color grades by one increment, was no doubt an attempt to minimize the chances of getting caught.

These fraudsters have gone to the extreme in upgrading their goods. It is a major instance of fraud, and the culprits should be condemned. But more importantly, we need to address this concern for the benefit of consumers who might now be leery about buying a diamond, which may or may not be accurately represented at this point.

We cannot ignore the fact that in the same time period, tens of thousands of diamonds left GIA with ‘proper’ GIA-grades, which were not altered after the fact by these evil-doers. [I just couldn’t resist… Vote Faith Summers for President.] But one has to wonder how many of these legitimately graded diamonds received an inadvertent bump-up in clarity and/or color grade, as a result of the GIA’s rapid and recent expansion of their offices across the globe. It seems to me that they’ve hired a lot of new and inexperienced graders, many of which are employed only seasonally, and they are just as capable as these hackers of producing diamond grading reports which are questionable as to their accuracy.

The GIA might be taking security seriously now that they’ve been hacked, but who is working to improve quality-control in the lab itself? If I had to vote on the status of the GIA-GTL as it stands today, I’d be forced to cast a vote of no confidence. Which is why I’m ecstatic that Crafted by Infinity diamonds are graded by the American Gem Society Laboratory (AGSL) which is based in the United States, and only has one location, where it is easy to oversee the operations of a permanent staff of seasoned graders. And each diamond is carefully evaluated by the trained staff of CBI prior to being submitted to the laboratory for grading, and upon it’s return to their offices in Antwerp, and by Wink Jones of High Performance Diamonds when it is sent to him for inventory. Now that’s peace of mind.

Read the Full Article in the Times of India

Photo credit: Associated Press via FBI.gov

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