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Investment Gems: A Telemarketing Scam

"Want to buy a high-quality ruby,
turn around and sell it to a buyer
I have waiting in the wings,
and turn a quick profit?"

If that pitch already sounds suspicious, imagine hearing it from a telemarketer.

One of the most successful gem scams involves selling "investment quality" gems by phone. Reports of new versions of this transnational con game surface in the press whenever some luckless buyer finally gets wise.

In one recent episode, a woman in California received a phone call from a man who identified himself as representing the Zurich Exchange in Ontario, Canada. He offered to sell her a fully certified natural ruby for $1,650. She was interested because a few years earlier she had bought a sapphire from another investment gem seller and she was convinced it was appreciating in value. The caller said he had a Japanese investor interested in buying the pair of stones and she could make a handy profit. She sent in her money.

The ruby was delivered from Florida, not Canada. And it looked a bit fuzzy, but it was sealed "to retain its value," so she couldn't be sure. However, it arrived with an official-looking certificate from Gem Identification Services.

But before the Zurich Exchange could sell the two stones, as promised, the representative called again and offered to sell her a 1.26-carat pear-shaped ruby for $4,700. A European investor, he told her, wanted to buy all three stones for a much higher price.

When she asked why he himself didn't just sell the stones to the investor, he said his firm didn't allow that. When she asked for some type of proof that she would receive funds from the future large sale, he told her that "exchange regulations" did not permit him to put anything like that in writing. She eventually sent a $700 deposit and received the pear-shaped ruby.

By this time she was sufficiently suspicious to have the stones appraised. Experts estimated the ruby's value at $50-$400 per carat wholesale, rather than the $3,750 per carat the seller had promised.

Similar scams continue to be under investigation by the U.S. Federal Trade Commission as well as by Canadian officials.