Facing a Life Sentence, Jewelry Wholesaler Flees
Authorities have launched a worldwide search for a Houston jewelry wholesaler, convicted of stealing $560,000 in memo goods, who may have fled the country.
Israeli citizen Yov Hassan, who ran Global Gold Jewelry Inc., is being sought by Houston police. His picture and description are being circulated in the Israeli diamond industry. Interpol, the international police service, has been asked to look for him, and the U.S. Internal Revenue Service is investigating him for allegedly underreporting his firm’s income.
Hassan was convicted of theft (a first-degree felony in Texas) in 1994 for keeping diamond and gold consignment goods, and proceeds from their sales, from three firms. The three were Dynasty International, an Israel-based diamond firm with offices in Houston; Camagi, a Houston gold wholesaler; and Rope Chain Inc., a California gold wholesaler.
After his conviction, Hassan received a 10-year “deferred adjudication” probation, which required that he pay monthly restitution until the three firms were repaid. (Hassan continued to sell jewelry for Israeli manufacturers, even after he was convicted.) However, by late 1998, the total restitution ($28,000) was far less than required by the terms of his probation, says Harris County (Texas) assistant district attorney Lester Blizzard. Yet Hassan’s company bank account held $1.3 million and he was living “an opulent lifestyle,” according to Blizzard.
Early this year, District Judge Mary Lou Keel increased monthly payments from $1,500 to $6,100. Hassan, who filed for personal bankruptcy, claimed he couldn’t pay it.
At a July 2 hearing, Keel revoked Hassan’s probation but left him free on bail pending sentencing after the July 4 weekend. However, Hassan disappeared during the holiday and didn’t come to his sentencing, though given two more days to appear. On July 8, Keel sentenced him to life imprisonment, the maximum penalty, and the most severe ever for a white-collar crime in the history of Harris County.
Though Blizzard thinks Hassan may still be in Houston, the prosecutor immediately contacted Israeli authorities, who in turn alerted their consulates worldwide to watch for Hassan. (The Israeli consulate in Guatemala was asked by an unidentified person in early July to issue a new passport for Hassan, which it refused to do. His original passport was confiscated in 1994.)
Anyone with information about Hassan can call Blizzard, in confidence, at (713) 755-5840.—William George Shuster
Tiffany to Get Diamonds Straight From the Mine
In what may be the ultimate in vertical integration, Tiffany is teaming up with Canadian diamond miner Aber Resources to get first crack at a new stream of uncut diamonds.
Under the agreement, Tiffany will buy the best-quality stones from Aber’s 40% share of the proposed Diavick mine in the Northwest Territories. Pending formal government approval, Diavick will become Canada’s second diamond mine in 2002, producing
6 million to 8 million carats a year. The country’s first diamond mine, Ekati, also in the Northwest Territories, opened just last year.
The agreement raises the unusual prospect of a retailer supplying its cutters with raw materials. Tiffany president and CEO Michael Kowalski tells JCK the company is still deciding how everything will work, but it’s likely that Tiffany will send rough to its cutters, who will charge a fee for their services. Some speculate that Tiffany, which has expanded its jewelry manufacturing operations, will open its own cutting facility, although Kowalski says “there are no plans for this now.”
Kowalski declines to estimate how much the company will save from this arrangement but notes the company will continue to buy diamonds from other sources. “This takes care of an important part of our diamond needs, but not all of them,” he says.
Michael Jones, Aber’s vice president of corporate development, notes the deal also has benefits for his company, which is based in Vancouver. “Typically, miners aren’t able to get the same prices as diamond cutters do,” he says. “This lets us share some of that margin between our two businesses.”
In addition, Tiffany will purchase 14.9% of Aber’s stock, at a cost of approximately $72 million. One member of Tiffany’s management team will join Aber’s board of directors.
In related news, De Beers and the owners of Ekati recently signed a formal contract that lets the mine sell a third of its production to the company. Analysts think the Aber-Tiffany deal makes it less likely that the Diavick mine will join the cartel, but Jones notes the mine still has to sell the diamonds Tiffany doesn’t want, “and we may well sell them to De Beers.”—Rob Bates
Online Jewelry Auction Competition Heats Up
Sotheby’s, the 255-year-old auction house, has formed a 10-year alliance with online book and music retailer Amazon.com to create a Web service to auction jewelry, art, antiques, books, collectibles, and other items. The new site, going online this fall, will be known as www.sothebys.amazon.com.
The alliance provides Sotheby’s with access to Amazon’s more than 10 million customers, who presumably will be attracted by Sotheby’s unusual consumer guarantees. Sotheby’s and its network of 2,800 participating dealers are expected to issue guarantees of authenticity and condition reports for each item available for sale.
Both Amazon and Sotheby’s will continue to operate their own online auction sites, which in Sotheby’s case will be dedicated to higher-end goods available only through www.sothebys.com.
With this development, the competition for customers who like to purchase jewelry through Internet auctions heats up. This spring eBay Inc., a leading online auctioneer with
3.8 million users, purchased the well-known San Francisco auction house Butterfield & Butterfield [JCK, June 1999, p. 19]. Sotheby’s own rival, Christie’s, also plans to start its own auction Web site.
Earlier this year, Sotheby’s announced it would spend $25 million to launch its Internet business this fall. A financial analyst quoted in Art & Auction magazine stated that Sotheby’s stand-alone site would be in a strong position in terms of its supply of goods. But, he said, “they really didn’t have a great feel for how to get people buying this stuff, and what kind of marketing dollars they were going to have to spend.” The Amazon affiliation provides that instant marketing reach—with placement on the largest e-commerce site in the world plus a link routing customers to Sotheby’s higher-end independent site.
For more information about online auction sites, see “Log on to Luxury” in our Luxury International supplement to this issue.—Jessica Stein Diamond and William George Shuster
Jeweler Faces Fraud Charges
federal judge has refused to drop criminal charges against a Florida jeweler accused of defrauding clients of millions of dollars. The jeweler, John R. Hasson, 47, also faces a $180 million civil lawsuit in state court on similar charges. He’s being held without bail.
“Jack” Hasson was a well-known jeweler in Palm Beach, Fla., who was sued at least nine times since 1984 by his clients for allegedly misrepresenting items or substituting fake stones for real ones. Hasson countersued in several cases; all the suits were settled out of court with confidentiality orders forbidding either side from disclosing terms.
In early 1998, however, another client, Aben E. Johnson, 72, filed the $180 million civil suit and refused to settle out of court. He said he paid Hasson $80 million over eight years for jewelry and artwork supposedly owned by film stars and historical figures. Independent appraisals found the items were worth only $20 million. Some were made of glass, cubic zirconia, and gemstones “painted or irradiated to change their color or laser-drilled and fracture-filled to hide flaws,” according to the Palm Beach Post.
Johnson’s suit also claims Hasson altered sales receipts and appraisals, forged his name on documents, and used phony gemological papers. The suit seeks triple the $60 million Aben allegedly lost and a freeze on Hasson’s assets.
Hasson, who closed his jewelry business in 1998, filed a slander suit, claiming Johnson’s allegations forced him out of business and prompted the FBI to investigate him.
On April 12, the FBI arrested Hasson and his former sales manager James Speiser, 46, and held both without bail. A third suspect, Clifford Sloan, 61, Hasson’s jewelry appraiser, was arrested in May while returning from South America, where he allegedly set up bank accounts for Hasson. They were charged with fraud, conspiracy to commit mail fraud, obstruction of justice, and conspiracy to launder money.
In July, Hasson’s attorneys petitioned to have the federal charges dropped, claiming Johnson’s liens against Hasson’s assets, including fees paid to his lawyers, hindered his constitutional right to legal counsel. Judge James King refused, saying that a federal court shouldn’t get involved in civil litigation, and left the issue to state court. He warned the lawyers for the government and Hasson to “be fully prepared” for a trial on the criminal charges, which is scheduled to start on Jan. 10.—William George Shuster