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UpFront
By JCK Staff
This story appears in the August 2000 issue of JCK magazine
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A federal judge has sentenced Florida jeweler John R. (“Jack”) Hasson to 40 years in prison for fraud and ordered him to repay $78.4 million to his victims. Nearly all the money—$77.7 million—will go to retired businessman Aben Johnson of North Palm Beach, Fla., whose lawsuit led to Hasson’s arrest. The rest will go to golf champion Greg Norman and other former customers, says the Palm Beach Post, which has covered the case since it began. The decision was issued by Judge James L. King on June 9.

It’s the largest fraud judgment ever against a jeweler, say legal and jewelry industry authorities.

Hasson, 48, a well-known North Palm Beach, Fla., jeweler who lived an opulent lifestyle and claimed celebrities among his clients, must serve 34 years before he is eligible for parole under federal law. He was found guilty by a federal jury on Feb. 25 of defrauding customers with overpriced, altered, and fake jewelry and gems; falsifying documents; obstructing justice; misrepresenting the value and origins of gems; coercing witnesses; and laundering millions of dollars through foreign accounts under false names in South America, the Bahamas, and Europe.

During Hasson’s trial, former employees and associates described schemes to fool customers, including a dummy corporation on the Isle of Man, near Scotland, through which Hasson claimed to buy millions of dollars worth of jewelry. Jurors also heard testimony about gem document forgery, alteration of gem color and weight, and gem switching—Hasson’s former jeweler claimed the ability to replace real diamonds with fakes in 30 seconds.

In the most elaborate scheme, Hasson paid several people to play the nephew, bodyguards, and harem of the Sultan of Brunei to trick Johnson into buying more jewelry.

Johnson, 72, spent $83 million over 10 years on jewelry that was later appraised at $6 million. In early 1998, Johnson filed a $180 million civil suit in Florida state court claiming Hasson altered sales receipts and appraisals, forged his name on documents, and used phony gemological papers. That sparked an FBI investigation that led to Hasson’s arrest on April 12, 1999. Johnson’s civil suit will be heard in state court once the federal process, including appeals, is completed. — William George Shuster

Yurman Appeals Punitive Damages Decision

Yurman Design Inc., well-known for its upscale cable motif jewelry, will appeal a federal judge’s decision to eliminate the $800,000 punitive damages awarded it by a federal jury in its suit against Prime Art & Jewel, JCK has been told by Maxim Waldbaum, Yurman’s attorney.

“We think the judge misjudged law and improperly took away a jury verdict that made perfect sense, because when there is injury, there is punitive relief,” says Waldbaum. “The jury made that very clear with its findings, which he affirmed.”

The Nov. 1 jury verdict cited Prime Art & Jewel, a Dallas jewelry firm, for copyright and trade dress infringement. It said Yurman’s trade dress—the “look” of the jewelry—is “inherently distinctive” enough for protection under trademark law. The decision marks the first time an American jewelry designer’s creations have been afforded that protection. The jury ordered PAJ pay Yurman $275,000 in statutory damages under copyright law and $800,000 in punitive damages under the unfair competition laws of New York state. Judge Robert W. Sweet, the presiding judge, also ordered 20 infringing designs destroyed.

But in an April opinion and June order, Sweet voided the $800,000 award as “excessive” and also denied Yurman’s request for an encompassing injunction against the sale of cable design jewelry because of “difficulty,” he said, in defining Yurman’s trade dress “precisely” in words. He did uphold other elements of the verdict, including the $275,000 in statutory damages for copyright infringement. (PAJ says it will appeal that.)

Judge Sweet’s recent ruling doesn’t affect “the terms of [PAJ’s] liability and extent of trade dress protection” for Yurman’s designs, says Waldbaum. “He hasn’t narrowed the interpretation, only—in his mind—that there are no punitive damages.”

Likewise, Sweet’s injunction, which is limited to the 20 specific pieces seen in the trial, doesn’t weaken the trade dress protection verdict on the Yurman “look,” Waldbaum contends. He adds that while the judge upheld the jury’s view that “Yurman’s trade dress is very visual and very protectable, courts don’t normally give advisory opinions on pieces that don’t exist.” The attorney notes that Sweet did “affirm the jury [on] liability and trade dress, and that continues our belief that Yurman has trade dress on every one of his designs.”

Designer David Yurman has said he would use the case’s legal settlement to set up a fund to assist young designers who take alleged copyists to court. Waldbaum said Yurman is “still committed” to that, but “the question now is how much money will be available” as the case continues. — William George Shuster

GIA Holds First Graduation

Playing catch-up with history, the Gemological Institute of America held its first-ever commencement exercises on Saturday, June 10, for nearly 300 of its former graduates. The brainchild of longtime GIA diamond instructor and special projects manager Carl Chilstrom, the pomp and circumstance took place under a bright California sun in the courtyard of GIA’s Carlsbad campus overlooking the Pacific Ocean. As friends and family members looked on, GIA Graduate Gemologists, Graduate Jewelers, and Graduate Jeweler Gemologists—some of whom graduated in the 1950s—received a handshake and commemorative document from GIA president Bill Boyajian and a Shipley medallion from vice president of education Brook Ellis.

The ceremony capped a week of activity at GIA, including seminars, tours of the campus, and the 10th annual Career Fair, which drew an estimated 650 attendees. The Saturday commencement exercises, hosted by dean of students Susan Elliott, included speeches by Boyajian, Ellis, and GIA chairman Richard T. Liddicoat. Dr. Christopher Bramlett of Christopher’s Jewelers in Concord, N.C., an AGS jeweler, delivered the keynote address.

Dr. Bramlett offered these words of advice to the graduates: “Make certain that your debits, all of life’s treasures which have been given to you, are matched by your credits, all of the different ways you can pay back the debt that you owe to your family, your community, and your school.” At the conclusion of Dr. Bramlett’s speech, the graduates rose and walked to the stage to receive their rewards.

The day’s ceremonies concluded with the unveiling of the Liddicoat bronze statue, which Gem Trade Lab diamond grading supervisor and sculptor Michael Clary labored over for four years. The life-size statue of Richard T. Liddicoat will stand in front of the Carlsbad facility to greet everyone about to pass through the front doors. Boyajian also presented Liddicoat, who began his long career at GIA in June of 1940, with a 60-year diamond pin, proclaiming him “Mr. GIA.” — Gary Roskin, G.G., FGA

Murder Suspect in Custody

One of four men suspected in last year’s murder of an armed guard during a brazen jewelry store theft in Nashville has reportedly been returned to local authorities.

The theft and murder were the work of South American gang members, says John J. Kennedy, president of the Jewelers’ Security Alliance, New York. The boldness and brutality of the attack sent chills throughout the jewelry industry.

Bryant Guartos, 27, is being held in Nashville Metro Jail without bond on charges of first-degree murder and aggravated robbery, according to The Tennessean, a Nashville newspaper. Guartos was taken into custody on June 22. He had been in jail in Miami on an unrelated robbery conspiracy charge.

Guartos and three others are accused of killing security guard Roy Benton Rogers, 46, of North Carolina. Police say four men ambushed Rogers and another security guard, Eugene Nagele, on March 17, 1999, in the parking garage of the Green Hills Mall as they moved a display case of Rolex watches from Carlyle & Co., the newspaper reported. Rogers was fatally shot and the other armed guard was knocked down before the four men took the watches and fled in a minivan. The security guards were employed by a Fayetteville, N.C.-based security company under contract with Carlyle & Co, police say. They also say the robbery was planned.

Kennedy says the jewelry industry was shocked over the violent nature and boldness of the robbery. “It’s very rare to have an armed guard killed,” Kennedy says. “They were very bold.”

Detectives of Nashville’s Metro Robbery Unit spent months investigating the case, which led to the identification of all four men, the newspaper reported. Two of the suspects are in custody on unrelated charges in Texas and another is in custody in Florida. Authorities refused to reveal the names of the other suspects until they are formally served with the Tennessee charges.—Anthony DeMarco

Dallahan Named JCK Publisher

Francis J. Dallahan has been appointed publisher of JCK, announced Stephen Bowers, group vice president of Cahners Business Information, which publishes the magazine. “Frank’s knowledge of the industry, his willingness to jump in and help at any given moment, and his leadership abilities are second to none,” says Bowers.

Dallahan, a graduate of the Wharton School of the University of Pennsylvania, joined JCK in December 1997 as director of trade relations and was named associate publisher in May 1999. Prior to JCK, he held executive positions with ArtCarved Bridal, the Diamonique division of QVC, William Schneider Jewelry, and Kurt Gutman Jewelry. His marketing experience includes work for Lenox China and Crystal and Krementz & Co. He has been a member of the JCK Show Advisory Board since its inception in 1992.

Dallahan and his wife live in Bucks County, Pa. They have three children, one of whom is also in the jewelry industry. Son Fran is a key account rep for Princess Pride.

JA Members Get Material on 'Conflict Diamonds’

The 10,000-plus members of Jewelers of America are telling their customers and diamond vendors that they don’t sell conflict diamonds, thanks to materials sent to them by JA. (“Conflict diamonds” are those illegally seized, smuggled, and sold by rebel forces in Sierra Leone, Angola, and the Democratic Republic of the Congo to finance their civil wars and terrorism.)

“We want members to have the necessary tools [to deal with the issue] in a timely and appropriate manner,” says JA spokeswoman Caroline Stanley. In addition to an overview of the problem, talking points to use with customers, and a copy of the January industry statement opposing the illicit diamonds, each packet contains:

  • A JA statement on the African diamond controversy, which members can retype on company letterhead and share with customers and the local press. It states that JA jewelers deplore the actions of the rebel forces in seizing and selling these gems; support efforts of the United Nations, the United States, and foreign governments to stop such sales; won’t sell “conflict diamonds”; and have asked their vendors not to sell them.

  • A letter to diamond vendors, which also can be retyped on company letterhead. Since an individual jeweler can’t verify a diamond’s country of origin, the letter asks diamond suppliers for written assurance that they aren’t buying diamonds from conflict areas and that they will try to prevent the sale of such illicit diamonds in the United States.

“We’re trying to be proactive by doing this, not reactive,” says Stanley. “Anything that is a matter of concern to jewelry customers is of concern to us and our members.” Some JA members already have had queries from customers about the issue, she noted, and “have asked JA for guidance on how to deal with that” in their local markets.

Other support material will be provided as needed, Stanley says. — William George Shuster

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