The Ghost of Appraisals Past

On Nov. 16, 2004, John Anthony Jr. stood in a Pennsylvania courtroom awaiting a jury’s verdict. He was accused of a reputation-demolishing, potentially business-destroying offense: switching a diamond.

The civil case revolved around a 1988 update of a 1965 appraisal, both performed by the defendant’s father, John Anthony Sr. The lawsuit was sparked by a third appraisal of the diamond in question, performed in 1999 by professional appraiser David Atlas, president of D. Atlas & Co., Philadelphia, and Accredited Gem Appraisers. Atlas’s appraisal conflicted sharply with Anthony Sr.’s 1988 update, which convinced the plaintiff—the daughter of the original 1965 clients—that the diamond had been switched during a remount that John Anthony Jewelers, Bala Cynwyd, Pa., did in 1991.

In its defense, John Anthony Jewelers claimed it was guilty of nothing more than using loose terminology on both the 1965 and 1988 appraisals, terminology that, however vague, was commonly employed back then.

The original appraisal, as written in 1965, reads: “Ring … Platinum six-prong mounting containing one round gem diamond weighing 2.01 carats.… $4,500.”

For his 1988 reappraisal Anthony Sr. used a 5x watchmaker’s eye loupe and relied on memory to complete the quality analysis. The ’88 appraisal reads, “Ring … Platinum mounting containing one diamond, F color, IF clarity, weighing 2 carats.… $14,000.”

In his deposition, Anthony Sr. (subsequently deceased) said he used GIA grades for color and clarity because he wanted to update the look of his appraisals. But he had never taken a GIA diamond-grading course, and he used improper equipment under inadequate lighting.

In 1999, Atlas graded the diamond E/VS1. He wrote in a 2002 report, “One could readily conclude the stone we examined in 1999 is a different one than examined by John Anthony [Sr.] in 1988.” The plaintiff sued for the value difference between an F/IF, and an E/VS1, roughly $12,000, plus punitive damages.

During his testimony, Anthony Jr. was asked about the consequences of switching diamonds. “The jewelry business is based on trust,” he said, noting that a jeweler who switches stones will lose his credit rating. “Reputation is everything in this business,” he said. “We don’t switch diamonds.”

To help in his defense, Anthony Jr. brought in Cos Altobelli, an AGS jeweler and appraiser whose credentials as an expert witness are among the best in the industry. In his written report, Altobelli included Federal Trade Commission guidelines stating that when grading for F or IF, the examination must be performed by a “skilled diamond grader, using 10x magnification, with adequate light.” Anthony Sr. was not a skilled grader, did not use 10x magnification, and was using fluorescent store lighting—inadequate for diamond grading.

Altobelli also appealed to fundamental logic, noting that, in his experience, when a diamond has been switched, the differences in quality are much more dramatic. “The substitute would have definitely been under 2 carats, and more likely to be a G to I color, SI1 or SI2 clarity,” he said.

Altobelli explained diamond grading, comparing the differences between using 5x vs. 10x-plus magnification, an eye loupe vs. a professional binocular microscope, and GIA terminology vs. imprecise terminology like “fine white.” Altobelli also gave his expert opinion on whether the diamond currently in the ring could be the same diamond sold in 1965. Altobelli noted that he looked at dozens of VS1, GIA-graded diamonds using a 5x eye loupe and could not see the grade-making inclusions. The plaintiff’s attorney objected to this last comment, but the jury had heard.

After listening to final arguments, the jury spent less than 20 minutes before returning to the courtroom to deliver its verdict: not guilty.

Staying out of Court

The Anthony case should serve as an object lesson: With countless imprecise appraisals from decades past still out among the public, more jewelers are likely to find themselves facing angry clients—or juries. And even though Anthony won his case, it cost him more than $100,000 in legal fees, expert-witness fees, and lost business when the store had to be closed so Anthony could appear in court or give depositions.

Barry Block, appraiser at Jewelry Judge in Garden City, N.Y., describes the typical scenario: “How many times does someone walk into my office and say, ‘This is my great-grandmother’s stone. It’s supposed to be a Flawless/D.’ And of course it’s SI1 and G/H color. They didn’t have the technology and the education that we have today. Basically it was done with a hand loupe.”

Block says the John Anthony Jewelers case never should have gone to court. “I don’t know how these things get this far,” he says. “There are always going to be problems, but there’s always a way around it—if you know how to talk to the client.”

Block thinks John Anthony Jr., appraiser David Atlas, and the client should have been able to resolve the conflict. “I get appraisals from the ’40s, ’50s, and ’60s on a regular basis that are not accurate,” Block says. “But that’s easy to explain. Just look at the equipment. Look at the technology. Look at the science. Look at the education. We didn’t have these back then. And if it’s said the right way to the client, this should never be a problem.”

For the record, Anthony Jr. did try to talk it out with the client. “For three years,” he says. Still, a jeweler confronted with an accusation based on an old, nonstandard appraisal should be prepared to explain to a client the differences between former and current appraisal practices. If you’re not, and if your store has provided appraisals that are substandard by today’s criteria, be sure to get some up-to-date appraisal training (see sidebar at right).

Don’t forget to point out that, even though an updated appraisal may indicate a lesser-quality diamond, the stone is still probably worth more than the original sale price.

Many appraisers have advanced their knowledge over the years and often want to get old appraisals back to update them. “I’m grateful when I have the first opportunity to review and update appraisals I have performed 15 to 20 years ago,” says Martin Fuller of Fuller and Associates, appraisers in McLean, Va. It allows him to educate clients on changes in appraisal technology and terminology and to explain and defend why his new opinion may differ from the original.

Jewelers who know they have substandard appraisals “out there” among the public should take the same approach. If you have a chance to update an appraisal, do so. Just remember to educate the client in the process.