Jewelry Industry Special Investigations Unit
The industry needs a Special Investigations Unit to ensure unbiased investigations
It is a basic tenet of the insurance industry Special Investigations Unit: you don’t let the one under investigation conduct the investigation. In simpler terms; you don’t allow the one being investigated to provide evidence that directs the course of the investigation report. The SIU investigator must take an independent view of the issue under investigation, and allow the facts to direct the course of the investigation. I learned this lesson working with the former FBI and U.S. Secret Service agents who worked for USAA Insurance SIU Division during my time there.
While this may seem a simple, common-sense approach to an investigation, this concept is completely lost in the jewelry industry. The absence of any jewelry industry Special Investigations Unit office allows for the ones being investigated to perform the investigations, with the results that we recently witnessed with the Tibet andesine fiasco.
When the GIA and AGTA investigate the GIA and AGTA
For those who have read the PDF edition of our book: GOBSMACKED! (the print edition will be shipped early next week for those waiting) the investigations of the Tibet andesine fraud was grossly hobbled by the fact that the organizations being investigated were the ones doing the investigation, at least for the most part.
The Real Investigation
The Tibet andesine investigation appeared to regard the television shopping channels who sold the material. The real investigation was of the GIA, AGTA and other labs who issued identification reports that identified the Tibet andesine as natural and untreated. Court documents showed that both Jewelry Television and Direct Shopping Network relied on the GIA and AGTA lab reports when selling the Tibet andesine as natural and untreated. Even though the lab reports were disallowed as hearsay evidence, the GIA and AGTA reports were at the heart of the investigation. Examples can be seen below of an AGTA GTC and a GIA lab report. Click on the reports to view a larger image of each.
What the GIA and AGTA had at stake
When the Tibet andesine story started to unravel, the GIA and AGTA were caught in a serious credibility problem. By issuing lab reports with the GIA and AGTA names at the top, these labs had put their reputations on the line by issuing reports that the Tibet andesine was natural and untreated, while at the same time having no idea what this new stone was or how it came to be. The lack of proper investigation and testing by the GIA and AGTA labs were at the very heart of the Tibet andesine fiasco, and they were at the cross-hairs of the investigation.
Applying the insurance SIU rule
This takes us back to the tenet of the insurance SIU investigation: you don’t let the one being investigated conduct the investigation. Again, it sounds like common sense to most, but this is exactly what happened with the Tibet andesine fiasco.
The GIA and AGTA investigate the GIA and AGTA
It is a fact that members of the GIA and AGTA had collateral influence and participation in four of the seven expeditions that investigated the Tibet andesine mines, and only these four expeditions found positive results.
Below is a prime example of the problem. This is the October 2010 expedition composed of: (from the GIA published report): Ahmadjan Abduriyim (now with the GIA), Brendan Laurs (Gemological Institute of America, Carlsbad), Richard Hughes (signer of AGTA GTC reports), Thanong Leelawatanasuk (Gemological Institute of Thailand), Flavie Isatelle (independent French geologist on behalf of GIA Bangkok), and other. No independent geologists, no independent mineralogists. The expedition is composed mainly of major lab representatives with collateral interests in the outcome of the expedition.
Three expeditions conducted by (1) Journalist Jordan Clary, (2) the National Gem Testing Center of China and (3) GRS GemResearch Swisslab owner Dr. Adolph Peretti found no trace of a Tibet andesine mine, or discovered prima facie evidence that fraud was taking place.
Expeditions by GIA and AGTA employees or representatives, including a representative of Jewelry Television, all reported finding Tibet andesine mines in up to 5 different locations. The issue was that one expedition report would be found to be a hoax, so the following expedition would go to a different location and report on a mine located at the new location.
Here is the problem: The independent expeditions with no collateral interest in the outcome of the investigation, found nothing or clear evidence of fraud.
Expeditions staffed by members of the GIA, AGTA or Jewelry Television, all found strong evidence of a Tibet andesine mine, although their stories had to change as each previous expedition report was debunked.
It is a simple fact that expedition reports that were favorable to the GIA and AGTA were staffed by GIA and AGTA representatives. The expedition reports that found nothing or evidence of fraud were independent investigations.
The GIA and AGTA Collateral Interests in Tibet andesine
To put it bluntly, the GIA and AGTA needed the outcomes to be positive to save their reputations and the credibility of their lab certificates. By controlling the investigation, those being investigated were able to control the outcome of the investigation.
The most extreme example of this is the investigation reports of Richard W. Hughes, whose signature appears on various of the AGTA GTC Tibet andesine reports, and whose expedition reports were highly publicized by the GIA in their Gems and Gemology publication, and are offered to this day on the GIA website. Below left is Richard W. Hughes showing children in Tibet how to pose for a picture for his expedition report. Below center is one of the AGTA GTC reports signed by Richard W. Hughes and John Koivula. Hughes and Koivula are seen at the Gem-A Conference in London. Below right is Richard W. Hughes posing with his Gobsmacked Gang cohorts at the same Gem-A Conference.
Above you see what happens when the one being investigated is allowed by the GIA and AGTA to perform the investigation. Click on the image to view the full AGTA GTC certificate signed by Hughes and Koivula.
How this applies today
The above scenario played out in the California State Courts, all the way to the California Supreme Court. Neither the GIA nor the AGTA could (or would) defend their lab certificates in court. Those famous names who signed the certificates never showed up in court or attempted to submit a Friend of the Court affidavit to support their positions. Both the GIA and AGTA were silent when litigation was involved, but highly vocal in their publications and media.
To this day, the GIA publishes the findings of their own employee’s expedition reports but ignore the independent scientific testing that showed the GIA lab reports to be in error. This is the current status of the jewelry industry; Those subject to investigation are the ones doing the investigating.
The IIJA Special Investigations Unit
The current status quo presents a clear threat to the integrity of the industry and the protection of consumers. Therefore, the Insurance Institute of Jewelry Appraisal is establishing a Special Investigations Unit to help solve the problem of the major labs being their own investigators. Based on the millions of dollars of profits raked in by the major gem labs, it is neither proper nor logical that the major labs be allowed to police themselves. The historical record proves that the major labs cannot be trusted regarding matters of ethics violations within their own operations.
The IIJA is setting up a SIU reporting network that will provide reports on problems with the major gem labs worldwide to the State Insurance Commissioners in all 50 US states, and any international governance organization that is involved in oversight of ethics in the industry.
I will have more on the IIJA SIU in the coming week. However, given what we have seen with the Tibet andesine fiasco and others, the need is clear that a truly independent investigations unit be established for the jewelry industry to stop the major labs from running roughshod over the industry, and running amuck over consumers.
More to follow…
Robert James FGA, GG
President, Insurance Institute of Jewelry Appraisal Inc.
a 501(c)3 Non-Profit Education Organization
Property and Casualty Adjuster, Texas Department of Insurance License #1300433