A New Jersey jeweler has pleaded guilty to participating in a $13 million international gem scheme. The jeweler, 43-year-old Michael Arnstein, admitted to conspiring with others to defraud more than 50 individuals and jewelry stores around the world by falsely presenting lab-created diamonds as natural gemstones.
Arnstein’s scheme involved misrepresenting the quality and grading of the diamonds to inflate their value. He would then sell the diamonds at an inflated price, resulting in substantial profits for himself and his co-conspirators. The scheme lasted from 2012 to 2014, during which time Arnstein and his accomplices made approximately $13 million.
The fraud was discovered when customers began to have the diamonds independently appraised and realized they were not as valuable as they had been led to believe. The victims included individuals from the United States, Canada, and India, as well as several jewelry stores.
Arnstein now faces up to 31 years in prison and fines totaling up to $1,250,000. He is scheduled to be sentenced in January 2023.
The guilty plea from Arnstein serves as a warning to others in the industry who may be tempted to engage in similar fraudulent activities. It also highlights the importance of conducting thorough due diligence when purchasing gemstones, especially when dealing with international sellers.
This case serves as a reminder that consumers should always be cautious when making high-value purchases, such as diamonds, and should seek out reputable sellers with transparent business practices. The outcome also showcases the commitment of law enforcement in investigating and prosecuting cases of fraud to protect consumers and uphold the integrity of the jewelry industry.
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