Use of Gemstones in Fraudulent
Investment Schemes
More conservative victims are swayed to purchase long-term assets
they can physically touch, such as gemstones, which are considered
more valuable and understandable to them, compared to the complexity
of paper instruments like stocks and bonds.
A Gem of a Deal
You get a call from a distinguished-sounding gentleman offering
information on excellent, low-risk gemstone investments. Through
questioning, during the initial qualification telephone call, they
determine that you have the financial capacity to participate in
large investments, so they mail out promotional materials
to you.
Their promotional materials contain representations
that their gemstones are low risk, profitable and highly liquid
investments. Some of their promotional materials also describe
bullion, rare coins and precious metals as investment products
offered by them. They state that the market price of these hard
assets is skyrocketing and will increase in value, not only because
experts have graded them rare, but also because of the demand.
They make follow-up sales calls to you, after allowing time for
the promotional materials to arrive. During the sales calls, they
typically make the following representations:
 |
their
gemstones will be sold to you at a discount; |
|
their
gemstones are procured from advantageous sources, such as
directly from mining companies, international markets, domestic
estate liquidations and distress sales; |
|
they
operate their business under government approval and follow
government guidelines; |
|
their
gemstones appreciate around 25-40% per year and have an established
average trading value that is monitored daily by them; and |
|
you
can easily re-broker or liquidate your gemstones through
them at a substantial profit to you. |
To create a sense of urgency in your mind, they claim that the
proffered gemstones will be sold quickly to another client if you
do not commit to purchase immediately. Once you succumb, they arrange
for an overnight courier to pick up your payment.
The gemstones are shipped to you along with two "third-party" identification
reports. The reports verify the gemstones' physical attributes
such as the size, weight, color and gem type but do not provide
dollar appraisals of the gemstones' values.
Although they tell you that your gemstone portfolio is a long-term
investment, they represent that they will re-broker or liquidate
your gemstones after a minimum period of eighteen months, and that
they routinely re-broker peoples' gemstones. They assure you that
re-brokering or liquidating gemstones through them is easy and
will result in substantial profits for you.
After you purchase, they contact you on a regular basis, giving
you an "update" on the financial appreciation of your "gemstone
portfolio." They typically represent that your gemstones have
appreciated between two and four percent per month.
During the update calls and at other times, they commonly solicit
you to purchase additional gemstones. In some cases, they persuade
you to trade-in previously purchased gemstones either for different
gemstones, or for a credit in the amount of the gemstones' higher "update
value," toward the purchases of more expensive gemstones.
Should you ask, they will refuse to liquidate your gemstones.
In fact, they do not initially sell their gemstones at or close
to the prices at which you could sell them in the gemstone market,
but at a multiple of that price. The gemstones they sell are not
excellent, low risk investments. Due to their inflated prices,
there is a substantial, if not certain, likelihood that you will
realize a loss when you seek to liquidate them.
Rarely do the gemstones they have sold to you appreciate in value
since the time of purchase. In instances where their gemstones
have appreciated at all since the time of purchase, it is at a
rate much lower than they have represented. Before the end
of the minimum eighteen month holding period that they require
before they will liquidate gemstones, or once you stop purchasing
additional gemstones, they typically cease contact with you.
If not actively traded for investment, gemstones may have to
be resold in the commercial jewelry market. Many jewelers
will not buy gemstones from an individual and those who do generally
pay substantially less than what they pay suppliers for similar
gemstones.
Sealed for our Protection
Years back, you invested a tidy sum in gemstones which you were
offered over the phone by a convincing salesman who assured you
that if you kept them long enough they would increase in value.
This you did, rather than broker through them, as they assured
you that you could. The items are protectively encased in plastic
with warnings not to break the seal for fear it will decrease their
value.
You recently got a call asking you to submit info on your earlier
purchased stones, after which they applaud your investing acumen
and tell you that you could probably get twenty times what you
paid for them. After such good news you are soon convinced
to add to your collection for even greater gains in the future.
They then offer to upgrade some of your stones by taking back
and crediting certain gems along with more cash. To ensure the
fairness of the deal they insist you call references and recommended
companies who can value your stones. These contacts are actually
employees of the same company reached by different phone numbers.
They call a bit later saying that they now have a "prospective
buyer" interested in acquiring your gems, but indicate that
your collection needs a more complete "portfolio" of
stones before the best price can be offered. They promise a quick
turnaround on your purchase, with payment of the profits to be
delivered, within 30 days of your payment, by an armoured truck.
To undertake this, you are informed that an advance payment is
required to cover a finder’s fee, duties or taxes, or commissions
or examination fees.
Soon they belittle your objections to spending $20,000 to get
back $200,000. They may even offer to lend you their personal funds
to help you out, then call back saying it's illegal and continue
seeking payment for the purchase they made on your behalf or they'll "get
in trouble".
The calls which can last for hours, consist of droning and
coercive brainwashing. Even efforts by family members and friends,
asking them to stop calling, are met with belittling calls back
to you.
You experience a fear which arises from having invested so much
and suspect that if you don't invest a little more you will lose
it all. You lose your sense of reality and judgment and find yourself
acquiescing to their threats and persuasion, trapped in a sinkhole
from which you can not escape.
Somehow, after you make the "required" purchases, the
deal falls through, as the Saudi prince buyer is recalled to his
homeland or a major change in the gem market alters their promises
of a quick gain to a long-term hold suggestion.
Your salesman is then replaced by a new one with a sad story
as a ploy to gain your sympathy, such as the other guy had serious
family troubles or was fired for offering you too good a deal which
they still had to honour. They claim to be able to fix the problem
swiftly with just a bit more money, which is needed to resolve
an easily rectifiable investment problem, or all of your money
could be lost.
The gems are usually just decorative stones or low grade gems
encased in plastic so as to avoid scrutiny or independent evaluation
which would quickly reveal their minimal value and overpriced nature.
Imprisoned For Your Protection
The operation calling itself the Canadian Gemstone Association marketed
their stones by telephone as investment-grade gems whose supply
was supposedly controlled by a cartel in Colombia and whose value
was therefore projected to increase substantially. The evidence
at trial showed they made false statements and representations
to induce customers to purchase and invest in gemstones at vastly
inflated prices.
Between 1993 and 1996, over 700 victims paid more than $5 million
for stones marketed by them.
In June 1997, a federal grand jury returned a 38-count indictment
charging Claire Peck, aka Cathy Jackson and eight others
with conspiracy, mail fraud and wire fraud. All defendants, which
included the principle BRENT BOYD, AGNES CARTMELL,
aka Bea Cartmell, MARK BOYD, aka Joe Prescott, ALBERT
MCAMMOND, aka Albert Adams, DAVID BECKLER, aka David
Edwards, GEORGE MAZIOTIS, aka Martin Brook, ROBERT ROSS,
aka Robert Stevens, HERVE SOURATI, aka Brian Sinclair, were
charged in each count.
Peck was convicted on five counts of mail fraud in violation of
18 U.S.C. 1341, and one count of wire fraud in violation of 18
U.S.C. 1343, and she was acquitted on one count of conspiracy,
18 U.S.C. 371 in the United States District Court for the District
of Vermont (Sessions, J.).
She is to serve concurrent 30-month terms of imprisonment, to
be followed by three years of supervised release. The district
court also ordered her to pay (jointly and severally with all co-defendants)
restitution of more than $4,000,000. Boyd pleaded guilty
in April 2000 and was sentenced to ten years in federal prison.
We Promise Never To Lie Again
Settlements negotiated by the FTC with several Los Angeles-area
based defendants, charged by the FTC with operating a deceptive
telemarketing scheme to sell gemstones as investments, include
a total of $115,000 in redress for consumers who lost money in
the scheme.
The FTC charged in a June 1992 complaint that International
Assets Trading Co., Inc.; company officers Garry Schaeffer (a.k.a.
Michael Taylor) and Thomas V. Lopes (a.k.a. Jack
Prather); misrepresented the market value of their gem stones,
falsely represented that they were excellent, low-risk investments
likely to yield substantial profits upon resale, and that they
were sold at or close to the prices at which consumers could
liquidate them through a market sale.
The FTC's complaint also alleged that they made the following
false statements:
|
gemstones
comparable to those the defendants sell have experienced
substantial price appreciation in the recent past (when,
in fact, they have not); |
|
the
gemstones they offer for sale are rare or are in short supply
(when, in fact, they are not); |
|
gemstones
purchased from them are excellent, low-risk investments and
that customers can reasonably expect to resell the gemstones
at a substantial profit within a stated time, e.g. 18 months;
(when, in fact, the prices charged by the defendants for
the gemstones make it virtually impossi ble to realize a
profit within the 18 months) and; |
|
that
they have been in business for seven to 15 years and that
they operate under guidelines of the California Attorney
General. |
Gem Sciences International (GSI); and its CEO, Sarabeth
Koethe allegedly provided appraisal certificates
that substantially overstated the values of the gemstones and
bore no relation to the values at which consumers could resell
their gemstones. The prices paid by consumers ranged from
less than $2,000 to tens of thousands of dollars.
Schaeffer and Lopes have agreed to refrain, in marketing gemstones
or any other investments in the future, from falsely representing
any factor likely to affect a consumer's decision to invest. Schaeffer
was also a defendant in another FTC case involving a similar scheme;
thus, his settlement with would prohibit him from marketing any
investment product by telephone in the future.
Lopes would be required to post a $50,000 bond before marketing
investment products by telephone in the future and if he goes into
business with another defendant in this case to telemarket investments,
the bond requirement would increase to $100,000. The charges
against International Assets Trading still are pending.
To settle the charges against GSI and Koethe, in connection with
any appraisal services they perform on gemstones or any other assets
sold as investments, they would be prohibited from, among other
things, falsely representing the cost or the fair market, wholesale,
replacement or cash-liquidation value of the asset and have agreed
to clearly and prominently disclose on every document they issue
discussing an investment in gemstones, that "purchasing gemstones
as an investment is very risky". Together would also
be required to pay $20,000 for consumer redress.
NOTE: These consent judgments are for settlement purposes only
and do not constitute admissions by the defendants of law violations.
Consent judgments have the force of law when signed by the judge.
10/25/93 Civil Action No. 92-3483 RMT - FTC File No. 922 3040
Now Travel Back Ten Years
In August 1983 the FTC filed a complaint against Kimberly
International Gem Corp. The complaint also named Frank
Kimball, founder and former president of Kimberly; co-presidents Stephen
Small and Steve Angelica; the firm's chief gemstone
appraiser, International Gemological Society (IGS); IGS'
president, Harvey Levitt; and three salespeople: Robert
McCallum, Rene Dupont and Jean Paul Pierre. Kimberly
and Levitt filed for bankruptcy.
The complaint charged the defendants with a variety of misrepresentations
in the telemarketed sale of gemstones, including false claims that
they sold at wholesale prices when their prices were actually many
times greater than those retailers charge, that customers could
easily resell their gemstones for a profit and that there was little
if any risk in the investment. They also delivered gemstones
inferior in quality to those ordered, kept consumers' gemstones
and replaced them ones of lesser value.
IGS in turn prepared certificates of evaluation for the gemstones
which gave false evaluations of their worth inducing individual
consumers to purchase them for from a few thousand dollars to tens
of thou sands of dollars.
Under the settlements, a $280,000 fund will be divided among
Kimberly's customers who request redress, with the refund for each
depending on the amount invested. Kimball will pay $125,000 into
the consumer redress fund. The remainder will be paid by
Angelica ($40,000) and Small ($35,000), who bought Kimberly in
1982, and Kimberly's insurance carrier, Mercury Casualty Co. ($80,000).
The injunctions and default judgments prohibit the officers,
the salesmen and IGS from misrepresenting the types, characteristics,
quality and retail value of gemstones and other investments.
The settlements require Kimball, Angelica and Small and the three
salesmen to disclose on the front cover of every sales brochure
and in every sales contract that gemstones are a high-risk investment,
that they are not as easy to sell as other investments and that
appraisals may not reflect the actual amount consumers may get
when reselling the gemstones. 8/28/85
Civil Action No. 83 5268 JMI - FTC File No. 832 3206
Should Be Stoned As Well
Rene F. La Treill, a.k.a. Ray Latreill, of Newport
Beach, California, has agreed to pay $1.5 million in consumer redress
to settle the FTC's charges against him for his role in a gemstone
telemarketing scheme, bringing the total amount recovered in the
case to $3.5 million.
The agreement stems from the FTC's 1990 complaint naming Newport
Gems, Inc., doing business as Capital Assets International;
RIME Inc., doing business as First Capital Trading Co.;
and three individuals that they falsely represented the value,
past appreciation, investment risk, likely resale price, and
ease of liquidating their gemstones.
The stones, including tourmalines, tsavorites, tanzanites, and
spinels sold for prices ranging from a few thousand dollars to
many tens of thousands of dollars, through unsolicited telephone
calls to consumers.
In addition, the proposed settlement agreement would prohibit
him from misrepresenting the value of any investment offering he
makes, and require him to disclose to future customers the risks
of investing in gemstones.
NOTE: This consent judgment is for settlement purposes only and
does not constitute an admission by the defendant of a law violation.
Consent judgments have the force of law when signed by the judge.
12/06/91 Civil Action No. 90 2001 R
Mining The Same Victims
TWO INDIVIDUALS "RELOADING" PREVIOUS VICTIMS OF
GEMSTONE FRAUD - 10/94
The Federal Trade Commission has charged the perpetrators of
an allegedly deceptive telemarketing scheme that preyed on consumers
trying to sell gemstones as investments.
The FTC charged two Florida residents, Thomas E. O'Day and Jeffrey
L. Kelley, alleging that they misrepresented the cost of
their gemstone liquidation program and falsely promised that
they had buyers ready and willing to purchase the consumers'
gemstones.
The FTC alleged that consumers often paid thousands more for
the gemstone liquidation program than the amount represented (including
agreeing to purchase additional overpriced gems or coins from the
defendants), and that the defendants did not locate buyers for
consumers' gemstone collections.
The FTC is seeking consumer redress and a permanent prohibition
against the deceptive scheme. The FTC's complaint detailing the
charges names Thomas E. O'Day, doing business as Thomas O'Day (also
known as Thomas O'Day Company, Tom O'Day Company, Thomas O'Day & Associates,
or Tom O'Day & Associates) of Orlando, Florida, and Jeffrey
Kelley, also known as Jeff Barnett.
Since at least 1992, the FTC alleged, the defendants have contacted
consumers throughout the United States who had previously purchased
gemstones as investments, many of whom purchased overpriced gemstones
from the operators of other schemes and offered to liquidate consumers'
gemstone portfolios for a fee.
The defendants allegedly offered to advertise the consumers'
gemstone portfolio, and promised to fax copies of the gemstone
certificates to prospective buyers who responded to their ads.
Consumers were told that they would be charged a fee, usually $529
or one of their gemstones, for the advertising program, and would
be charged a 5 per cent commission to be paid at the closing of
the sale.
Thereafter, the complaint charges, the defendants misrepre sented
that:
-- they had identified buyers ready and willing to purchase consumers'
gemstone portfolios at a signifi- cant profit for the consumers,
and that a sale was imminent (in fact, the FTC alleged, in numerous
instances, the defendants had not identified a qualified buyer
willing to buy the consumer's gemstones at a significant profit,
and no sale was consummated).
-- consumers would not have to pay anything beyond the advertising
fee and commission for the defendants to sell the consumers' gemstone
portfolios (in numerous instances, the defendants allegedly pressured
consumers into buying additional coins or gemstones to "round
out" their portfolios, or into paying extra fees by claiming
that they had a buyer and the additional money was necessary to
close the sale); and
-- the coins or additional gemstones they sold consumers would
be liquidated at prices that equaled or exceeded the prices consumers
paid, and that the prices con sumers paid equaled or were close
to the prices at which the gems or coins could be liquidated through
a market sale (in fact, the FTC alleged, the defendants' victims
are left owning additional overpriced gemstones or coins which
they cannot liquidate at or close to their cost through a market
sale).
Thomas E. O'Day agreed to pay up to $350,000 for consumer
redress, related to charges arising from his role in an allegedly
deceptive telemarketing scheme. Jeffrey Kelley has pledged
$200,000.
Charges against Kelley are still pending.
The settlement also permanently prohibits O'Day or Kelley from
making misrepresentations regarding any material aspect of any
future telemarketing offer though they must also post a bond of
$1 million to protect future customers before marketing or liquidating
coins or gemstones, or before acquiring any interest in a business
that does so.
The order includes various reporting requirements that will assist
the FTC in monitoring their compliance and further prohibits Kelley
from using, or providing to any third party, his customer lists.
05/08/95 FTC File No. x95 0023 - Civil Action No. 94-1108-CIV-ORL-22
Handles Bull Not Oxen
Sweet Song Corporation of L.A. California dba Pacific
Wellington Associates marketed gemstones as investments to
consumers and had registered a fictitious business name, Windsor & White
Trading Company, under which it also did business. Ron
Hudson, Inc., and Tsavorite Sword Corporation also
did business as PWA.
They operated as a joint venture and shared a trade name, a business
location, telephone lines, promotional materials, sales scripts
and employees. Sweet Song and Tsavorite have the same owner, incorporator,
director, and share at least one officer.
Hari Jiwan Singh Khalsa ("Hari Khalsa"), a/k/a Stephen
Jon Oxenhandler a/k/a Bob Thomas, was the owner incorporator,
director and an officer of Sweet Song and Tsavorite. Siri
Ram Singh Khalsa ("Siri Khalsa"), a/k/a William
Taylor a/k/a Phillip Anderson, was a salesperson for
W&W and PWA.
According to the FTC, since at least 1993 and continuing thereafter
to 1998, they maintained a substantial course of trade in the fraudulent
offer and sale of gemstones as investments to consumers.
 |
An in-depth look
at a tourist scam in Thailand involving sapphires. |
No Booze Beneficial for Bogus Buyer
03/03 - Frederick Carrier, who pleaded guilty in October to money-laundering
charges stemming from a telemarketing scam, was sentenced in Miami
Friday to 70 months in prison despite his request for a shorter
sentence because he's suffering from liver disease.
Noted in court was Carrier's prior criminal record, which goes
back to the 1970s and that he was on supervised release for a similar
offense in Louisiana when the U.S. attorney's office in Miami filed
the money-laundering and fraud charges in 1999.
According to the indictment, Carrier and six associates ran a
telemarketing scam, contacting collectors of coins, art or gemstones
and promising to sell their collections to willing buyers if they
added a few more pieces to their portfolios.
No sales ever took place. The funds sent by hopeful sellers ended
up in bank accounts for shell corporations set up Carrier and his
associates then immediately withdrawn.
Carrier had gone to the Philippines during the government's investigation,
which began six years ago. He was arrested there last May.
The 1999 indictment also included charges against his then-wife,
Linda Carrier; Donald Webber, Carrier's half-brother; Nely Emiliani;
and Teresa Amores, all of whom have entered guilty pleas.
Brian Matlin, a Miami-Dade accountant mentioned as co-conspirator
but charged separately, also has pleaded guilty to money-laundering
conspiracy charges.
Webber is serving 27 months in a Guam jail. Emiliani and Matlin
have already served prison terms.
Carrier's sentence, which he indicated he would appeal, also includes
five years of supervised release after the jail time, a $1,500
fine and a special assessment of $500.
Gem Scam Operations in Thailand Continue to Victimize Tourists
02/08 - Thailand - Manoeuvring clients into paying top dollar
for ordinary items is a common practice in the business world,
but when there is outright trickery involved, as experienced by
a large number of foreign visitors to Bangkok who have fallen victim
to its infamous "gem scam", the question of legality
comes into play.
Typically, the scam begins when tourists are spotted in front
of popular tourist destinations, for example, at the entrance of
the Grand Palace, Wat Pho, Wat Arun or the Erawan shrine. As they
wander around, the tourists are approached by a friendly stranger
who is an expert at initiating conversation.
From victims' accounts over the Internet, the stranger commonly
opens with a casual, "Where do you come from?" This allows
the scammer to learn a little about the tourist instantly. Sometimes
the con artist gives "helpful" (though wrong) information
such as, "The temple is closed today for a celebration."
Most tourists do not wish to appear rude, and many are eager at
the chance to interact with locals. They tend to pay attention
to the scammer, who may be male or female, and the conversation
flows from there. Before long the stranger recommends to the usually
novice traveller an alternative tourist destination, most likely
a temple which is not marked on standard travel guides.
At this point, another stranger, usually better-dressed than the
first, may appear on the scene, and eventually join in the conversation.
He or she will recommend to the tourist a souvenir shop (almost
always a jewelry store) worth visiting.
This shop will be described as a government-run export centre,
often in the last day of a big discount promotion exclusively for
tourists. After about 5 to 10 minutes of persuasive chit-chat,
the stranger will then offer to call a tuk-tuk for the tourists
to visit the alternate destination and then the jewelry shop, and
even go to the extreme of bargaining the fare. The tuk-tuk driver
in the end offers an extremely low fair, as of course he, along
with the stranger(s) will get a commission on whatever jewelry
the tourist may purchase.
At one famous tourist destination in the middle of Bangkok, novice
tourists are approached by scammers seeking to make a quick buck.
Once the tourists are in the tuk-tuk, the driver may claim that
he has given them a discounted fare because he will get a "petrol
coupon" from the jewelry store for taking them to visit. Without
a doubt, this is a clever way for the driver to gain some consideration
from the tourists and guarantee their visit to the jewelry store.
Eventually the tourists arrive at the jewelry store, where they
are greeted by professional but warm salespeople. Every manner
of sales tactic is employed, but primarily they are enticed by
the ridiculously attractive discounts. The offer is made to have
the purchased items parcelled to their home address, "to avoid
problems with customs or the risk of loss or damage during the
trip," and of course, to prompt the sale.
Victims commonly report spending 100,000 to 200,000 baht on necklaces,
rings and other accessories ornamented with precious stones. Payment
is made at the store, and tourists are then made to sign a purchase
contract that sets the terms and conditions for the transaction.
After the customers have made their purchases it normally takes
days or weeks before they have the chance to have them valued by
another jeweler. Then they realise they've paid far too much for
too little quality, and that the friendly stranger(s), the tuk-tuk
driver and the keen sales professionals they encountered were all
working collectively to make some quick money.
Eventually they may take some small comfort in learning they are
not alone when they read about the near-identical experiences of
a host of other victims of the gem scam posted on the Internet,
for example at http://www.2bangkok.com.
Scammers everywhere
One particularly lively account of the gem scam is provided by
an expatriate living in Bangkok who recently contacted Perspective.
The reader, a 51-year-old man who used to run a tour business in
Bangkok, complains, "There are too many tourists getting cheated
these days, and the authorities don't seem to care."
He says that many of his guests had complained of the constant
scamming they faced during their visit. "I had a young couple
tell me the Grand Palace was closed, and that it had been closed
3 years before on an earlier visit. They had visited Thailand twice
and did not get to see the Emerald Buddha!"
According to the voluntary source, scammers are working around
the entry to the Grand Palace in plain view of management and security,
and there are 30 or more scammers working the Erawan. He estimates
that they are approaching hundreds of tourists every day.
The source remarked that on his last flight into Thailand he observed
a welcome video message from the Tourism Authority of Thailand
(TAT) which did not offer any warnings to arriving tourists about
possible gem scams, and in fact, it suggested that tourists buy
gems in Thailand.
"Thousands of holidays are ruined by the devious, organised
crime teams lurking at every tourism site. Even taxis and tuk-tuks
are in on the scam. It's relentless," he said.
According to the source, tourists are hit on as soon as they arrive
at the airport, and a recent crackdown at the Suvarnabhumi airport
caught 900 scammers of various types working the arrival area - "who
then paid a 1,000 baht fine and were back at it immediately." A
news piece from the Bangkok Post confirms that in June and July
last year, 900 illegal taxi drivers and tour guides were arrested
at the airport.
Having been in Thailand for nearly two decades, the source says
he is shocked to discover the extent of the multi-layered scams
on tourists and regrets that some unfortunate tourists have no
idea how devious these scammers are.
Suspecting he is a tourist, on his frequent walks past the Erawan
Shrine the scammers approach him as well, telling him that they
are doctors, lawyers or teachers in their attempt to lure him into
the gem scam. He recently decided to photograph every scammer that
approached him, and now has around 20 photos of different individuals.
He explains that these individuals are all working together, communicating
by cell phone. In his words, "It is a very elaborate operation.
They are well dressed, polite and speak good English. They pretend
to be friendly Thais wanting to help lost tourists. Their goal
is to lie and scam everybody they meet."
He alleges that many of the scammers are off-duty tourist police
officers, and claims that two weeks ago he was attacked by scammers
when he took their pictures.
"I fled into the Central World store when they tried to attack
me. They had pulled the strap off my camera. This was recorded
on the Central World security video system.
"But even though the security cameras clearly show the attackers,
the police did nothing," he added. He hints that the security
guards at the Erawan Shrine, the Amarin Plaza, the Gaysorn, the
Erawan Plaza, the Central World, as well as members of the Thai
police, the Tourist Police and BTS Security are all aware of what
is going on.
"These security guards see the scammers all day, every day,
but do nothing to protect the tourists. I even see the guards talking
with them."
The source said he first contacted the TAT in June 2007 to report
the matter, and has sent the Tourist Assistance division of the
TAT two dozen letters since, some of which have included photographs
of the scammers, but the same group of people congregate around
the major tourist attractions every day.
He cautions that the gangs operate "at just about every tourism
site in Bangkok, and many taxis parked in front of hotels are also
plying the gem scam on visitors".
The official view
Mrs Niramol Plianjaroon, head of the Service Standard Development
Section, Bureau of Tourism Service Development, TAT, admitted that
the gem scam is not new to Thailand.
"Gem scams ranked first among all tourist complaints received
when the TAT was established in 2002," she confirmed, acknowledging
that they occur in the same fashion and are repeated time and again.
She thinks it is vital to address the matter to maintain Thailand's
image among tourists. "Certainly, the scam sends the message
that in Thailand, high prices are charged for low quality.
"Sellers should not seek to obtain impossible profit margins," she
added.
Mrs Niramol said both the TAT and the Tourist Police Division
offer victims assistance. Incidents can be directly reported at
the Tourist Police Division, or by filing a complaint at any branch
office of the TAT. Tourists who have travelled out of the country
can report to the Ministry of Foreign Affairs or the Ministry of
Commerce.
"Officers will then facilitate communication between the
sellers and the tourists to address the matter," remarked
Mrs Niramol.
Pol Maj-Gen Choochat Suwannakom, commander at the Tourist Police
Division, noted that tourists who have been victims of the gem
scam can get a refund of as much as 80% of the purchasing price
from the store, provided that the gems are in good condition and
no agreement in the sales contract is violated.
"Before, it would have been possible to get a total refund
for the tourists, but nowadays the jewelry stores have the customers
signing the sales contract which sets forth conditions for returning
the items," he said.
The commander said the jewelry stores that have been reported
are legally registered with the Ministry of Commerce.
He suggested that the gem scam persists because only limited action
can be taken.
For example, overcharging for gems is not technically considered
a crime, as the gems involved are not fakes. What's more, the value
of gem stones can vary tremendously, according to cut, clarity
or origin - and unlike gold, the prices are not standardised across
the world.
"The only legal action that can be taken against those involved
in the activity is a 1,000 baht fine, given on the basis that they
are intentionally troubling tourists," he observed.
Nevertheless, the commander said there has been a decrease in
gem scam cases in Bangkok, and commented that these days complaints
from tourists who have been mugged or have lost bags on inter-provincial
buses outnumber those who have fallen for the gem scam.
Data from the Tourist Police Division suggests that 62 gem scams
had been reported over the course of 2007, a significant drop from
the 83 cases reported in 2006. Most of the complaints have come
from Australian, Malaysian, Singaporean and Korean tourists against
the same handful of jewelry stores.
Pol Maj-Gen Choochat says his officers, both in uniform and in
casual clothes, constantly monitor tourist destinations to apprehend
the quick pitch artists waiting to lure tourists to these stores.
He remarked that tourists can contact the division's hotline,
1155, to report these incidents, or for assistance on any other
matters. He said that on-duty officers on the hotline are skilled
in the English and Chinese languages, and the division also has
contacts with volunteers from 40 other nations.
To be on the safe side, he advises, tourists should be selective
and only visit big shops with good reputation when purchasing precious
items like gems. "Tourists should always look for a guarantee
of the quality of the gems," Pol Maj-Gen Choochat said.
He added that members of the Thai Gems and Jewelry Association
normally abide by a code of practice, which includes a provision
for a refund of at least 80% up to 45 days after purchase.
I contacted the Thai Gems and Jewelry Association to discuss the
issue with them, but they have been unable to schedule an appointment
over the past 2 weeks.
Commander Choochat concluded by saying it was impossible to guarantee
that tourists looking for jewels wouldn't face any problems. After
all, jewelry stores are profit-based, like any other business.
Hence, in the end the phrase "Let the buyer beware" applies
to those interested in purchasing gems in Thailand, particularly
when they find themselves surrounded by overly friendly strangers.
TIPS FOR GEMS SHOPPERS IN THAILAND
In Thailand, bargains can be found on gems and jewelry, but one
should not take risks unless they have guarantees of good quality.
Real gem shops very rarely offer sales, and anything advertised
as "one day only" or "export special" is almost
certainly a scam.
It is impossible even for a qualified gemologist to tell the difference
between genuine and fake gems without the proper equipment. If
you buy gems without getting them tested independently, you are
buying solely on the word of the salesman or store.
The Thai government and the Tourism Authority of Thailand (TAT)
do not own, sponsor, promote, endorse or authorise any gems stores.
Anyone who says otherwise is lying.
It is recommended that customers look for after-sales services
offered by the jewelry trader. For example, certain accredited
gem stores will give customers a certificate upon their purchase,
and they will offer customers a money-back guarantee for the merchandise
if customers are not satisfied.
Help for Gem Scam victims:
Tourists who have been tricked into the gem scam should file their
complaint with the Tourist Police or the Tourism Authority of Thailand
(TAT).
The hotline for the Tourist Police is 1155. The head office is
located at 2170 Krungthep tower, New Petchaburi Road, Huay Khwang.
The number for the TAT call centre, open daily from 8am to 8pm,
is 1672. The TAT head office is located at 1600 New Petchaburi
Road, Makkasan.
Visit http://www.tourismthailand.org or http://www.tourist.police.go.th
for more information.
Bangkok Post - SIRIPORN SACHAMUNEEWONGSE
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