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INVESTMENT DIAMONDS

CELEBRITY LAWSUIT IN UNITED STATES HIGHLIGHTS PROBLEMATIC TOPIC OF EVALUATING DIAMONDS FOR INVESTMENT

A lawsuit decided in the United States has the potential, as a result of the publicity has garner, of shaking up the market for diamonds for investment.

The plaintiff in the suit is one the United States’ most popular athletes, Drew Brees, quarterback for the National Football League’s New Orleans Saints, who together with his wife claimed that a jeweler from the San Diego satellite city of La Jolla intentionally misled and defrauded them out of millions of dollars.

The lawsuit, which was originally filed in a San Diego Superior Court in 2018, accused Vahid Moradi and his company, CJ Charles Jewelers, of selling Brees and his wife, Brittany, what they claimed the jeweler described as investment grade diamonds that were supposed to appreciate in value. But the couple submitted the diamonds to an independent appraiser in 2017, and were told that they were worth about $9 million less than they had paid for.

Opening statements in the civil case were delivered at the end of May.

PROMISED DIAMONDS WOULD APPECIATE 150-200% IN VALUE

Speaking in the witness stand, Brees said that he had been friendly with Moradi since in 2003, when he began purchasing watches from his store in La Jolla. In 2008 or 2009, he said, Moradi advised him to invest in colored diamonds.

Brees said Moradi said the diamonds would appreciate in value from between 150 to 200 percent. It was an irresistible investment opportunity, Brees’ attorney Rebecca Riley said, noting that the 40 year-old quarterback “knew he can’t play football forever.”

Riley said Moradi has represented himself as an expert in investment grade diamonds. But a diamond ring he sold to Breeses for $8.1 million was valued by the appraiser to be worth $3.75 million.

Another diamond that Moradi allegedly said was purchased in Europe had actually been bought from a dealer in nearby dealer in Orange County, Riley claimed.

Drew Brees, the quarterback of the New Orleons Saint, who together with is wife was a plaintiff in the law suit against a La Jolla jeweler.

CLAIMS PRICE DIFFERENCE PART OF STANDARD MARKUP

Speaking to the court, Moradi’s attorney, Peter Ross, said that no evidence showed that the Breeses had been overcharged, or that the defendant had over-represented the value of the diamonds. 

Each diamond, Ross noted, was sold together with a grading report from the Gemological Institute of America (GIA).

In defense of his client, Ross claimed that it was the Houston-based appraiser that had scammed the couple, by advising the Breeses to sell the pieces at prices below their actual worth to a wholesale dealer with whom he was associated.

Ross added that any discrepancies between what Moradi paid for the diamonds he sold to the Breeses, and what they paid him paid him, was part of a standard markup.

In June, a Superior Court jury awarded the New Orleans Saints quarterback and his wife more than $6 million in the lawsuit against the La Jolla jeweler. After the decision was passed down, Moradi said he planned to appeal.

But the case is likely to cast a shadow on a number of issues that have long been contentious in the diamond and jewelry industries. Among them are the methods of appraising stones and the concept of markups by jewelers. Markups are a particularly subjective area, but it is is fair asking whether a diamond or jeweler retailer can set any prices they want.

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