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Gems, Money Laundering & Unlawful Acts


#1

Anil,

I buy most of my sapphires from a supplier in the USA who has many
years of one on one dealing with families in SriLanka and Thailand.
For the last three years I have had the same experiences you have
encountered. My customers have been buying the same quality of
sapphires from GJX and AGTA that I sell at a fraction of what they
cost me to purchase. I talked to my supplier about this and he talked
to his suppliers in country. They both said that the stones being
sold in the USA are money laundering of illegal activities in thier
countries. Heroin, guns, technology, and explosives are traded for
sapphires. These trades are very lucrative as they circumvent laws
and governments and give radical groups illegitimate power through
insurgency and horrific violent acts. Stones traded under these
circumstances come to the USA and can be sold at a fraction of thier
market value and still make gross profits for the seller. That is why
in the US the “Patriot Act” will be more forceably enforced at the
Gem Shows.

Recent editorials in the Lapidary Journal and Colored Stone not only
pointed out that smuggling is a way of life in they
glorified the life of the smugglers. Money laundering is a very real
part of these smugglers. This is one of the main reasons why I do not
support LJ or Colored Stone.

For legitimate gemstone dealers in the USA these are tough times. I
do not have advice how to change our businesses. The only way I
survive is through innovation and skill, not buying and selling.

Related Article:

Conspiracy Theory: Gems & Junkies in Burma

Gerry Galarneau


#2

Hi Gerry & All,

I understand the what you are describing here with black market
stones being sold cheap and/or dumped on the market.

This reply is thinking out loud and not directed toward anyone in
particular…

Should we refuse to buy inexpensively priced merchandise because it
might be smuggled goods and only buy from a supplier who is more
expensive?

If the smuggled stones were sold at the so called "market rate"
would that make buying them more legitimate for the buyers
conscience? If so how do you know if you are just paying more for
black market goods?

Should we the buyer be demanding a certificate of origin from the
sellers?

To what extent should customs “police” what comes into this country?
Gem stones are not dangerous…Drugs and money laundering is…But
how can we police what other countries cannot control or worse
sometimes condone in their own backyard?

The same problem comes in with the people who want to buy gold from
conflict free countries. It can’t really be tracked without an
incredibly expensive tracking system. That said, not very many
people will want to pay the expense of such tracking. In other words
it would require a pretty hefty tax on us all to place a system in
the works. Do we want the government to tax us on gem imports or
impose tariffs?

On a slightly similar topic with the taxes…Does it bother anyone
else that we use “Denatured alcohol” (with methanol that makes it
undrinkable) so that it is not taxable and therefore much cheaper
than using Ethanol (which is drinkable)? Sorry if I have the
chemicals wrong. In other words we use a more dangerous product just
to save the tax money rather than pay-up for the drinkable stuff to
dissolve our boric acid in. Annoying isn’t it?

Just needed to vent that,
Thanks,
Mark


#3

Conspiracy Theory: Gems & Junkies in Burma
http://www.ganoksin.com/borisat/nenam/burma-gem-smuggling.htm

I recall reading an article in the LJ not terribly long ago which
extolled the wonderful deals one could have buying corundums in
Thailand which were smuggled out of Burma. I was utterly disgusted.
There is an embargo on Burmese goods for a very good reason-
purchasing Burmese stones helps support a repressive, totalitarian,
even genocidal government. The fact that the LJ chose to print such
an article is for me stand-alone justification for non-renewal of my
subscription.

Of course, there is open trade with many countries where there is no
embargo, even though the conditions may be just as bad. We should
take at least a little trouble to find out if the goods in which we
trade are the products of child labor, slave labor or starvation
labor.

Our actions have consequences! Yes, a good living can be had by
trading in the fruits of repression, slave labor, and general
misery. Those who choose do do so, however,are on a level with pimps
and crack dealers, having made the conscious decision to enrich
themselves on the suffering of others.

Human rights issues in the jewelry industry- that would be a dandy
ongoing topic for the LJ! But if they are afraid of alienating
beaders, how much more so will they be afraid of alienating
advertisers who themselves are getting fat by exploiting human
misery in third world countries.

Dos Manos Jewelry
http://www.dosmanosjewelry.com


#4

Gerry,

I could not have said any better than you did.

These outside sellers resort to anything they can, under the sun and
get away with.

We do not know when they DUMP their merchandise and collect huge
amount of cash what do they do with it or how do they deal with it
or transfer from to their native country?

I am sure they must collect in checks or credit cards.

If they collect all “CASH” it is all the more reason that we all must
be alarmed.

WE as PEOPLE are the losers. It is just LOSS in all spheres and
aspect of our lives here.

It is the same money – untaxed, unaccounted for, collected after
selling merchandise from dubious sources (for instances stolen,
robbed, deceived, looted including legitimate ones) – we do not
know - may have been being used against us. (I personally know of
cases where the people who come to USA collect merchandise from the
small trader or cutter on memo never to be paid)

Our labor looses, our standard of business is being lowered.

Why can’t we get together and apply all the rules that are
applicable tous all are applicable to them also?

For instances If we as dealer and jeweler wire over $ 50,000 in a
year we come with in the purview of one act or the other and are
accountable for more than 6years.

But “they” are not, even if the amount is hundreds of thousands of
dollars.

Perhaps they do not even use a bank account to transfer the money
(Because I assume they cannot open an account if they do not have SS

or all nine yards or incorporated or registered business)

I think ALL of us have been cheated by “these” people out of our
honest and hardworking livelyhood, and it is time to get out of our
inertia.

Anil


#5
There is an embargo on Burmese goods for a very good reason-
purchasing Burmese stones helps support a repressive,
totalitarian, even genocidal government.

The situation in Burma is a very complex one, as I think Richard
Hughes’ excellent article

"Conspiracy Theory: Gems & Junkies in Burma"

illustrates. The government doesn’t get a percentage of the profit
on selling smuggled gems – except for the fees paid to get those
gems across the border. Whether the people who do the smuggling are
any better than the government is another story altogether. But I
think it needs to be said that there are a lot of good, honest,
hardworking people involved in the gem trade in Burma, and if anyone
is going to be hurt by a boycott, it will be them. There are no
simple and easy answers.

For me, the point of discussing these issues in a magazine is so
that readers are aware of the complexities and can make up their own
minds. I wouldn’t expect every one of those readers to agree. But if
you feel that a magazine has unfairly or inaccurately portrayed the
situation, I’d encourage you to contact them and say so. I can’t
speak for anyone other than myself, but I do print letters from
people who disagree with points I’ve raised, and I would love to
encourage more discussion of this issue and many others.

I’d also like to say, in response to a related thread, that I
seriously doubt that all inexpensive gemstones that enter this
country got here as a result of smuggling and money laundering, or
even a large percentage. I would certainly be willing to consider
evidence to the contrary, but to my mind, “I know a guy who knows a
guy who swears it’s true” does not constitute hard evidence.

Thanks for giving me the opportunity to respond in this forum.

Morgan Beard
Editor-in-Chief
Colored Stone