The U.S. attorney for the Northern District of Ohio has charged four Canadian men in their purported participation in a diamond and jewelry investment scheme that allegedly used false and misleading information.
The men—James Gagliardini of Unionville, Ontario; Michael Shumak of Markham, Ontario; Anthony Palazzolo of Pickering, Ontario; and Jack Kronis of Toronto—were each charged with one count of wire fraud.
The defendants portrayed themselves as employees of Paragon International Wealth Management, a Canadian investment firm that sold investors diamonds and other jewelry items through unsolicited phone calls, according to the U.S. attorney.
Court papers said the alleged scheme played out like this:
– Paragon’s initial telemarketing sales pitch involved persuading customers to make a small investment in “pink diamonds,” which it claimed would increase in value, according to the U.S. attorney—noting that, if the customer agreed to make a purchase, Paragon would often mail the customer a real pink diamond and a legitimate appraisal certificate.
– Paragon would then contact the customer and persuade them to invest more money. These sales pitches allegedly involved false or misleading information—including purported claims that a “wealthy diamond buyer” in Hong Kong was prepared to buy large quantities of pink diamonds at a high price, but would do so only if the customer invested more money with Paragon.
– Paragon would contact the customer again and allegedly provide a false explanation for why the “wealthy buyer” did not purchase the customer’s pink diamonds, including the customer going through a divorce. The customers would sometimes be given colored diamonds instead of cash, the papers said.
– The customers were told that the new colored diamonds could be placed in an auction, but these were largely fabricated, and customers were often told their diamonds failed to meet the reserve bid, and they needed to put in more money, prosecutors charged.
– The customers were sent diamonds with appraisal certificates from a business named “Saxon Kruss,” which inflated the value of the colored diamonds, the court papers alleged.
The leading defendant’s lawyers did not return a request for comment by the time of publication.
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