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Real Deal

Real Deal: The Case of the Natural Nightmare

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BY KATE PETERSON

Editor’s Note: Real Deal scenarios are inspired by true stories, but are changed to sharpen the dilemmas involved. The names of the characters and stores have been changed and should not be confused with real people or places.

Joey Rennick had known Sam Lauderhill since he was a boy. He remembered the man his father introduced as “Mister Sam” coming into their Midwest store from the time he was old enough to sweep up around his dad’s bench while the elder Joe Rennick looked through the diamonds, colored stones and jewelry lines the veteran industry rep carried into the store.

Sam continued to visit the store even after Joe Senior’s retirement, and Joey continued to show him the same courtesy his father had through the years, even buying the occasional interesting piece, unique colored gem or great value loose diamond.

Sam turned up at Rennick Jewelers about two years ago after a lengthy absence, carrying an expansive collection of certified loose diamonds and a nice group of previously owned prestige watches. Sam told Joey that he was planning to retire at the end of the year, but that he’d planned to work harder than ever till then, and hoped he could use the time to increase business for himself as well as for Joey and his other “lifetime clients.” Two days later, Sam came back to the store and asked to talk with Joey privately. He told Joey that he had lost his wallet the night before, with all of his cash and credit cards inside. He said he needed to get back on the road home that day, and asked to borrow $1,000. He promised to pay the money back as soon as he got home and offered to leave several diamonds with Joey as collateral. Joey gave Sam the cash and sent him on his way. Sam made good on his promise to repay (despite one unfortunate issue with a bounced check).

Just before Thanksgiving, Sam was back, this time with “something very special” — a natural, fancy orange, 1-carat round. Joey looked at the dark stone and immediately assumed it was irradiated. He told Sam that he wouldn’t pay more than $1,500 for it. Sam asked Joey what he would pay if the color was actually natural. Joey said that the value would obviously increase exponentially, and suggested they send it to GIA.

Sam agreed. Joey had his office manager weigh, measure and pack the stone up right then, listing the specifics and a value of “in question” on the packing slip. Since Sam was heading past the post office on the way out of town, he agreed to drop the package off.

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The diamond came back from GIA with a report detailing clarity (SI1), dimensions (6.34 x 6.39 by 4.2 – a match to the store’s measurements) and weight (1.03 carat – also a match with the store’s notation) and identifying it as irradiated fancy brownish orange. Sam came by to pick it up several days later.

A full year later, Joey received a certified mail letter from the attorney for a Mr. Anthony Petruzzi who, the letter stated, was suing Joey for switching his $8 million diamond. Joey called the attorney and explained that there must have been a mistake, as he had never heard of Anthony Petruzzi, and had never done any business with him. The attorney said that there was no mistake; that Mr. Petruzzi had entrusted his diamond to Sam Lauderhill, who had entrusted it to Rennick Jewelers, and Rennick Jewelers – i.e. Joey Rennick – switched his naturally colored diamond for an irradiated one.

Joey laughed as he assured the attorney that the stone was not switched – that he dealt only with Sam Lauderhill, who watched as the diamond he brought in was packaged to be sent to GIA and who picked the diamond up with the GIA report upon its return. The attorney answered calmly that he should save his explanation for his own lawyer, as his client was certain that the irradiated stone he got back was clearly not the one he gave his friend Sam Lauderhill. He told Joey that Mr. Petruzzi had an appraisal from Atlas Gem Lab in his home town in Kansas, showing that the diamond he gave to Sam weighed 1.05carats, measured 6.41 x 6.35 x 4.15 and was of natural color. He was quick to point out that Sam had already confirmed the diamond he took from Mr. Petruzzi and gave to Joey matched the description on the appraisal. Joey said that he’d never heard of Atlas Gem Labs, and questioned whether they had the proper equipment to distinguish a naturally colored diamond from an irradiated one. The attorney called Joey’s question “immaterial,” since the discrepancies in the measurements and weight clearly illustrate that the diamond was switched.

Joey was both amused and annoyed, since the whole scenario seemed so totally preposterous. The more he questioned the attorney, though, the more belligerent and nasty the attorney got, and the more Joey realized that, preposterous or not, he was probably facing significant expense in both time and attorney’s fees to get out of the mess.

The BIG Questions
Could Joey actually be held liable for a switch? What should he do? Should he incur the expense of hiring an attorney, or should he just wait to see what Mr. Petruzzi and his legal team do? Should he contact Sam to ask about Anthony Petruzzi and to find out what was really happening or is it best that he keep his distance from his lifelong associate?
Comment below (please leave your name and store) or at [email protected]

 

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