Financial News

Diamond Dealer Conned Investors Out Of £1.5 Million

A diamond dealer raised £1.5 million from a scam that tricked investors into believing he was selling precious gems that would rocket in price.

Joseph Jordan, 24, promised the stones would increase in value by between 8% and 50% a year.

But he failed to disclose this was a lie and that the valuable gems he charged them for made him a profit of £1.36 million.

Jordan’s scam was uncovered when the Insolvency Service investigated Henderson & Forbes Ltd, the London company selling the diamonds of which he was the sole director.

The investigation started when the company went bust in August 2014.

1000% mark ups

The probe uncovered the company was marking up the price of the diamonds by between 463% and 1,333%, making the value of the gems worth much less than the investors were paying for them.

Jordan was selling fancy coloured diamonds – stones outside the colour range of normal diamonds which vary in price. Normal diamonds are colourless and worth much more.

Investigators found that Jordan was misrepresenting the value of the gems to customers between October 3013 and August 2014.

Because of the inquiry, Jordan gave an undertaking he would not take on a role as a director for 14 years for the scam and for failing to proper accounting records.

He also could not explain payments of £400,000 from the company bank account to another individual.

String of scams

Anthony Hannon, the Official Receiver in the Public Interest Unit, said: “The period of disqualification sends a clear message that misrepresentation to investors will not be tolerated. The fact investors have lost over £1.5 million makes this an even more serious case.

“Directors who do not maintain and preserve their company’s books and records adequately will be investigated by the Insolvency Service.”

Undertaking not to act as a director avoids court action that would lead to a formal disqualification.

A string off fancy coloured diamond scams involving millions of pounds worth of lost investment cash have been based in London in recent months.

The London Diamond Bourse, which regulates the trade in the UK, says the number of coloured diamond scams is increasing and warns investors to have gems independently valued before parting with any cash.

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