In the wake of the DMIA’s letter (and meetings) with the U.S. Attorney to get more action on the GIA grading scandal, I spoke to Cecilia Gardner, president and CEO of the Jewelers Vigilance Committee, and a federal prosecutor for 16 years, about how U.S. Attorneys pick their cases and what impact such a call might have. Gardner stressed she was speaking generically, and not about this specific case:

Will the DMIA’s appeal to prosecutors make a difference as far as whether this case is prosecuted?

I do think that government officials are responsive to the people they serve. However, it is not going to influence their steps as far as the decisions they make on prosecutions.

Every case rises or falls based on the level of proof. You have to assess whether a grand jury thinks there is probable cause. That is the calculus that every prosecutor makes: Will they be able to get a grand jury to issue an indictment?

What can members of the industry do to see an investigation takes place?

One cannot know the extent of the investigation that has already taken place. These investigations are not operated in the public domain. Calls for bigger investigations may be beside the point. The investigation is as big as it is, based on the level of evidence.

How about going to a different prosecutor?

The case could go to a state prosecutor, yes. The likelihood of it being undertaken by a different prosecutor is unknown. Certainly there have been cases when a state prosecutor declines to prosecute, and the federal prosecutors step in. It’s worked the other way as well. But state prosecutors, just like the federal prosecutors, are not going to pursue cases when they can’t gather the levels of proof to get what they need.

If there was proof that graders took money to change a stone’s grade, would the Federal government be likely to investigate that?

Commercial bribery is not something that ordinarily gets the attention of the federal government, unless it is at such a high level and there were systematic, repeated incidents that might influence how a business is conducted.   

Thank you Cecilia. I have to say, when I heard her speak about “evidence,” that struck a chord, since that’s what I need to print a story.

So let’s recap: The GIA says it reported the “misconduct” at its lab to Federal authorities. According to this New York Times story, the Feds launched an investigation. Around this time, there was market talk of subpeonas. So it does seem there was some effort to look into this. Chaim says he knows the name of the FBI agent on the case (who, rather interestingly, has apparently also looked into 47th Street money laundering.) Chaim concludes the investigation is “closed” and the “grand jury went home a long time ago.” And indeed, in the two years since this broke, things have been extraordinarily quiet.

This topic puts me in mind of a meeting I once sat in on between a DDC creditor’s committee and the Manhattan District Attorney, about one of the notorious “memo fraud” cases of the 90s. The attorney laid out reasons why the case was not strong enough to go to trial, but the dealers were not having any of it. At one point, one of them said, “This man obviously doesn’t care about prosecuting criminals.” To which the prosecutor, replied, astonished: “Don’t you understand? We are prosecutors. This is what we do.”

So let’s assume the US Attorney does not have a problem with prosecuting. It’s what they do. And there was obviously something there, by the GIA’s own admission. We can then only conclude that: a) the evidence the Feds found was not enough to warrant prosecution; or: b) what they found didn’t seem to justify the office’s resources. (In which case, perhaps the wrong office was approached.)

These are sobering thoughts for people, like me, who would like to see this matter independently investigated. Gardner does say that people who have evidence of wrongdoing should report it to the US Attorney. Now that could be a game-changer. But until then, things seem kind of stuck …

Here is my standard warning for GIA posts: Comments are held for publishing at the discretion of the moderator. Abusive or defamatory posts will not be published. And, as they said in grade school, please, let’s not always see the same hands ..

Rob Bates

JCK News Director