Scam – Coloured Diamonds

Usual disclaimer first :

If an investment looks like it is too good to be true then it is !

So, a man calls you up and offers to send you a brochure on coloured diamonds which are rare and make a great investment. Who doesn’t know about how valuable diamonds are ? The brochure comes and on its glossy pages it talks about rare coloured diamonds, the rise in diamond prices, maybe something about diamond mines and maybe even something about China or another emerging market.

The nice man rings back in a day or two and you start talking about the fantastic investment opportunity ….  This could be your first investment (run away now !) or the latest in a string of investments such as Shares The Boiler Room Scam . Either way no matter how convincing the man is you should just put the phone down because this is how it will pan out:

  • The nice man will take your investment monies, say £1,500, and you will receive in the post a certificate of Authenticity. This is probably genuine (!).
  • The nice man will phone you back later and offer you another one, which you will  buy because everything went so well last time. Doesn’t seem like a scam at all does it ?
  • The nice man may sell you one more depending on how much money he feels you have or just may leave it there.
  • Other people will phone you with investment opportunities. Land, shares, wines, minerals etc etc.  Ignore them !

It doesn’t seem like a scam. You have your Certificates of Authenticity. Your diamonds are held in a secure vault in Switzerland and you are prepared to wait a few years before you sell them for a nice healthy profit. In Year three the vault tells you that your free first years storage is up and you need to pay £100 for the last years storage and then the same or more each year. You decide to get it valued to see how it is doing. It is then that you realise that not only are coloured diamonds not actually that rare but they are not worth much money at all.

You have two choices: Pay a few year’s vault charges or get your diamond delivered back to you. The second option will not be viable, if you cost it out, as it will probably cost as much as the diamond is worth due to the courier and insurance charges. So you are stuck.

Actually there is a third choice and this is what I got my parents to do. Contact the vault and tell them to sell the diamond and pay the vault charges out of the proceeds. This means you end up with no diamond and no money. But that is the joy of investing in what you know nothing about…. That is what happens when you are scammed.

My parents bought (I think) three diamonds. The one I dealt with cost just over £1,500 and two years later was valued (by the only place in London who would give me a rough quote) at £340. This was subject to them actually seeing the diamond and they gave no guarantee that they would even pay that or even buy it.  The cost of a ticket to Switzerland and one nights hotel to pick it up (which they vault company were not at all keen on) would have been more than £340. To have them deliver it plus the year’s storage would have been more than £340.

So …. BEWARE.  If someone phones you out of the blue with an investment opportunity just ignore it. If you really want to part with some money then please contact me and I will tell you where you  can send it to me !

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