When a Gemologist Reveals That a Client’s “Diamond” Is Moissanite, The Reputations of Two Jewelry Businesses Are Threatened

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RESIDENTS OF LANDALE thought of their town as a "just right" size: a solid industry and business base with a big enough population to offer a moderate sense of anonymity for those who like that sort of thing, but small enough to avoid most of the big city hassle. The downtown business owners — even direct competitors — all knew each other and even had an unofficial pact to "keep it local," using each other's services whenever possible.

Real Deal is a fictional scenario designed to read like real-life business events. The businesses and people mentioned in this story should not be confused with actual jewelry businesses and people.

Kate Peterson was president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at [email protected]

Paulson Jewelers had been in their prime downtown Landale spot for 108 years and enjoyed an impeccable reputation for quality and integrity that Tim was committed to safeguarding while he worked to keep the business growing with the times.

Near closing one day in early March, Helen Davies came into the Paulson store with an engagement ring she wanted to sell. The ring was a well-worn, 4-prong solitaire setting stamped "14KP" set with a 7.5mm stone. Paulson's customer service associate, following company procedure, prepared an intake envelope. She collected Helen's contact information, noted a description and photographed the ring, then tested the stone in Helen's presence using the store's handheld diamond tester, which indicated that it was, in fact, a diamond. The associate then took Helen, the ring and all of the information she had collected to one of the store's consultation rooms where she introduced Helen to Susan Calder, Paulson's gemologist and buyer.

After examining the ring carefully using a gemological microscope and the store's advanced testing device, Susan determined that the stone in Helen's ring was not a diamond but rather was a diamond-coated synthetic moissanite. She described the makeup of the stone to Helen and explained how it could have fooled the basic diamond tester. When she said that the most Paulson's could offer for the ring was the melt value of the metal — just over $125 — Helen was furious. She insisted that the stone in her ring was a diamond and that Susan and her fancy equipment were absolutely wrong. She then told Susan that she had bought it from a young man at Town Craftsman Jewelers for $4,500 and produced a hand-written receipt as verification. Susan was puzzled, since she knew Town Craftsman to be a small downtown repair shop that didn't typically sell any inventory. Hearing Helen's raised voice, Tim Paulson stepped into the room. Helen demanded that Tim look at her ring and point out Susan's mistake — but when he put the ring back through the testing device, he confirmed Susan's findings.

Helen stormed out of the store, but not before announcing her intention to make certain that everyone in town heard about how Paulson's tried to take advantage of her. Knowing Dan English, the owner of Town Craftsman, neither Tim nor Susan believed that Helen was telling the real story.

Early the next morning, Darren Rendel, a young man Tim recognized as Dan's assistant at Town Craftsman, came into the store and confronted him, accusing him of lying to a customer, undervaluing her property and trying to buy her ring at well below market value. Darren explained that he personally had sold the ring Tim and Susan saw the day before to Helen Davies after buying it as part of a lot in 2020 from a connection his older brother had in New York.

Guessing that Darren had likely been ripped off by an unscrupulous seller, Tim asked Susan to show him the process she had used to assess the stone. After watching Susan demonstrate on a sample stone, Darren pulled a ring out of his pocket that appeared to be identical to the one Susan had evaluated the evening before and asked her to examine it while he watched. As expected, that ring too held a diamond-coated moissanite.

Darren was mortified. He said that he and his brother had taken $25,000 they had inherited from their grandmother and spent it on 10 identical rings they bought from a dealer they met through his brother's boss, the owner of a local construction company. He said that though he really knew little about diamonds, they trusted the man completely and saw the buy as an opportunity to make some extra money. Darren said that since Town Craftsman didn't sell jewelry, his boss Dan was OK with him selling to friends and family on occasion — so Darren didn't think it was a problem to offer the rings to customers he met while handling their repairs at the shop. He also mentioned that he had "borrowed" one of the old receipt books that had been in the back room waiting to be thrown out since Dan converted to a POS system 5 years ago.

Darren said he had sold nine of the 10 rings but wasn't sure he could track down any of the buyers except for Helen, who was a friend of his aunt, and who had called him the evening before to complain about Paulson's. He begged Tim to not tell Dan until he could reach his brother and figure out what to do.

First and foremost, Dan needs to restore Paulson's reputation. After that, he has a lot of work to do to save his repair business. Then he needs to get educated about diamonds and gemstones, if he continues to sell them.

As the owner of the store, it is your obligation to explain to the other owner what happened. Whether you go into all of the details that were shared with you is another thing. As an independent business in a small local community, you would be doing yourself a disservice if you are not totally transparent with the other business owner.

Tim should give Darren the opportunity to talk to Dan first, but if he doesn't, then I think Tim should definitely have a conversation with Dan. I’d also make sure Darren calls Helen while he's in the store and explains to her what happened. It's not fair that Tim and his business get bad-mouthed by Helen for just doing their job. Darren made a big mistake (or mistakes) and needs to own up to them. Then he needs to learn his lesson from this and stay in his lane. There are a lot of crooks out there. Don't be the idiot that blindly keeps them in business by putting your chips in a game you know nothing about. And Dan needs to keep a tighter leash on his business and his employees.

As friends in the business, the jeweler owes it to his friend to discuss and not withhold info. By keeping the secret, he colludes and becomes suspect himself. They can all work together to try to decrease the damage done by the foolish employee. The employee had no business trying to do business out of ignorance. He may have seriously tarnished the reputation of his employer.

He absolutely should not honor the request. He should call the owner, Dan, immediately and tell him the whole story as he knows it. It's Town Craftsman's reputation that's on the line now. Darren's decision to "borrow" some old receipt books puts Town Craftsman right in the crosshairs.

Dan needs to own up to the situation, find a way to locate the other eight rings that were sold and refund the purchase prices of all of them.

When the truth comes out, and it will, Helen will understand that it was Darren and not Paulson's that was "trying to rip her off." Allowing entrepreneurial freedom isn't always the best choice, but particularly with people who are not trained in the things they are selling. Town Craftsman will take a huge hit from this, and Darren might not have a job when all the dust settles.

Darren needs to be held accountable to both Helen and Tim. First, Helen needs to be reimbursed no questions asked and apologize to Tim for her mudslinging. Secondly, Darren and his brother need to find the nine other buyers and reimburse them if possible. Darren's boss needs to set store policy that no "outside" sales carry his store logo, period.

Incidents like this give honest jewelry stores a bad image. No one without gemological training should be buying stones, period, including those who have been in business for years. This type of screwup costs customers, reputations and money. Personally, I would fire Darren and charge him with fraud.

Paulson's reputation is being smeared in town. Give him a set time, maybe a week, to resolve this, but only if he contacts Helen and asks her to stop talking until he can get to the bottom of things. Tell him you’ll need to talk to the other jeweler to maintain your name in the community.

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Kate Peterson is president and CEO of Performance Concepts, a management consultancy for jewelers. Email her at [email protected].

Except for a few years when he worked as an accountant, Jim Schwartz has always been a jeweler. He grew up in the business and after "counting beans" for a few years, he and his wife, Robin, opened Robin James Jewelers in Cincinnati, Ohio. "We were coming to a stage in our life where we knew we have to make a decision," says Jim Schwartz. He and Robin wanted to do it right, so they called Wilkerson. The best surprise (besides surpassing sales goals)? "The workers and associations really care about helping us move out own inventory out of the store first. It was very important to us."

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