VOL. 24, #3, Fall, 2006
Mozambique Tourmaline Hits the Market, Collecting Burma Spinel, Red Diamonds, AGL Purchased Press Release, In The News: Jewelry Scandal
Mozambique Tourmaline Hits the Market
by Robert Genis
Recently discovered in Mozambique, Africa, a brand new tourmaline was found which may rival the colors of tourmaline from Paraiba, Brazil. Rumors of this new material have been rampant since the 2006 Tucson Gem Show where a few large pieces were seen. The Paraiba market has really been in search of a new product since the Brazilian Paraiba has dwindled in size and availability. The market is ecstatic about these new goods, but the new find is already mired in controversial nomenclature wars.
Until the 1990's, the most expensive tourmalines on the market had been the chrome tourmaline and Ouro Fino, Brazilian rubellite. Dealers were shocked when Brazil's Paraiba (neon windex blue and florescent green tourmaline) hit the market at the Tucson Gem Show in 1990. At that time, two or three carat sized Paraibas could be purchased for $1000 per carat. Many dealers were overheard saying they would never pay that much for a tourmaline, or the material must be irradiated because it looked too good to be true. Today, gem dealers longingly tell stories of the material they could have or should have bought in the early days. After the labs decided the material was heated, but not irradiated, the goods took off. In the current market, $45,000 per carat is a common wholesale asking price for an unheated large, neon blue Paraiba gemstone. A gem dealer once said about the steep prices charged for this material, "The high price of these stones is justified because nothing quite compares to these electric colors in nature."
Today, there are three mining areas in Brazil producing small amounts of this material, usually in sizes under a carat. The material tends to end up in Japan. The second round of these stones were from Nigeria a few years ago. Production of this material is sporadic and the colors tend not to be as vivid as the Brazilian material. However, these stones are coveted by collectors.
The New Mine
The mining of tourmaline has been going on for 200 years. If this neon looking tourmaline was abundant, they would have found it a long time ago. The fact they only recently found small amounts in three different locations, means this quality is rare.
Further, it was rumored that large quantities of this material were discovered in the the jungle of Alto Ligonha plateau in Mozambique. This is not true. According to my sources in Bangkok, out of every 20 parcels you see, only one stone is of high enough quality to even facet.
Tourmaline is an interesting group encompassing several minerals with similar chemical compositions and atomic structures. Tourmaline shows the greatest color variation of any gemstone, and even includes gemstones that are bicolored and tricolored. Tourmalines are known for their complex crystal structure and chemistry. All tourmaline crystals begin as colorless. The colors are created later by a myriad of trace elements, including iron, manganese, chromium and vanadium but Paraiba or Paraiba type tourmaline owes its spectacular colors to small amounts of copper and manganese. Tourmaline is 7-7 1/2 in hardness.
Not treated, the colors of the Madagascar material are much more varied than the colors from the other deposits. They range from lilac to violet to purple, light to medium to dark blue, light to medium to dark green. The stones can also be bicolored. For example, some display green to purple. These rare and unusual colors may become desirable and sought after by collectors.
The unheated goods are attractive but not eye-popping. According to one dealer, "These stones are definitely not neon from across the room," as some Brazilian Paraiba can be.
Ideally, the top colors range from neon blue to neon green with a turquoise blue or robin egg blue also being desirable. It is estimated that 80-85% of the production of Brazilian tourmaline with bright blue to greenish blue "Paraiba" colors have undergone heat treatment. The Nigerian material is also heated. Some of the new Mozambique tourmaline is turning more electric with proper heat treatment.
Dealers who own this material are presently experimenting with heat treatment. One owner said, "You would be surprised at the advice we were given regarding heating this material. Some recommended heating the stones to a low 300-400o Celsius. Others say heat the goods to 700-780 Celsius. We need to experiment to learn which colors will change to an advantage at what temperature."
So far, the largest stone cut is a 76 carat bicolored green/blue. The stones will come in all sizes and shapes from 3 mm rounds to 20-30 carat stones. Probably the 1-5 caraters to be the best sellers because the 20 carats stones will wholesale for over for over $100,000. Interestingly, the larger the stone the better the saturation of color. The stones are also clean.
Any new stone is a marketers delight. These goods will be sought after by other dealers, retailers and even manufacturers. Expect the collector market to jump on these goods.
Here is where the controversy begins with the new material. What is in a name? Well, to the marketers of gemstones a name can be everything. It appears the sellers of these gemstones want to label any stone from all three major tourmaline-producing locations as "Paraiba." Certain dealers want to make their goods more marketable by cashing in on the Paraiba name. They argue Paraiba is a trade name rather than a location. The dealer community is split on this issue. Other dealers say, for example, you cannot make Burma a brand name and apply it to any red ruby that looks Burma, even if they are from Thailand or Africa.
Many of the world's foremost laboratories got together in Switzerland and the 2006 Tucson Gem Show and decided that the material should be described on a gem report as follows:
Variety: Paraiba tourmaline.
Comment: The name Paraiba tourmaline is derived from the locality where it was first mined in Brazil.
Origin: Origin determination is optional.
In other words, you could get a report from a lab stating a stone was Paraiba without even mentioning it was from Mozambique. Would this be a fair and accurate description to the final consumer? Of course not. A more honest and accurate description would be Paraiba-type or Paraiba-like, origin Mozambique, or Nigeria or Brazil. In most cases, laboratories should be able to discern the difference between these locations. Despite what the labs state on their reports, each stone will find its own price level based upon what it looks like. A fine neon windex blue stone will sell for considerable money, whether it is from Brazil, Nigeria or Mozambique.
Presently, low heat has created some light windex blue and light scope green colors in this new material. Remember, Paraiba or Pariaba-like gemstones are an exception because these heated gems are considered acceptable by collectors.
The colors of the material are not as neon as Paraiba but still very beautiful and electric. The best colors of the new Mozambique material are approximately 80% of the best Brazilian Paraiba colors.
Every serious collector should have some of these goods in their portfolios while they are available and relatively inexpensive. Based upon past mining strikes, it is always financially prudent to purchase this material when it first hits the market. These exciting new colors are more vibrant than most gemstones presently on the market. Many in the industry believe this material will be the next Paraiba.
Spinel is probably one of the most misunderstood, yet prized, gems in the marketplace. It is often referred to as a collector's or a gem dealer's gem. Spinel is a gem coveted by inside connoisseurs and certain gem dealers themselves because few really appreciate its unique qualities.
Gemological historians are uncertain as to how spinel was named. It may have come from "spark" in Greek, "point" in Latin, or "thorn" in Italian. From the beginning of time, it was assumed all red stones were rubies, from "ruber", the Latin word for red. In 1783, mineralogist Rome de Lisle discovered there was a gemological difference between ruby and spinel. In the early 1900s, scientists devised an inexpensive method for creating synthetic spinels, which is why many inexpensive birthstone rings are actually synthetic spinels.
One of the most interesting things about spinel is the crown jewels of many monarchs gleam with spinel that were originally thought to be ruby. The most famous examples include The Black Prince Ruby, The Timur Ruby, the drop-shaped spinels in the Wittelsbacher Crown, the 105 carat red in the Louve in Paris, King Henry the Eighth's "ruby collar", the 414.30 spinel in the Imperial Russian crown and the spinels in the Persian Crown Jewels in Teheran. All these stones were once believed to be ruby. In all likelihood, a great deal of regal jewelry thought to be ruby in the western medieval world is, in fact, spinel. This is evidence that spinel rivals ruby as one of the most important and beautiful colored gemstones.
Spinel is a magnesium aluminate, its pigments are chrome and iron. Its hardness is 8, and it forms as a cubic crystal, like a diamond. Spinel occurs in octahedral crystals, and has a complete absence of cleavage. Due to the gems dispersion (0.021) gem spinels can possess vivid fire, and the intensity of these colors is partially due to the fact spinel is singly refractive. Spinel is usually formed as a contract metamorphic mineral in limestone. It is discovered as rolled pebbles in sand and gravel pits. It is formed because of its resistant physical and chemical properties. It is usually found with corundum. Characteristically, the inclusions in spinel are minute spinel crystals. Normally, spinel is not heated or enhanced in any way.
Ideal Spinel Colors
Spinel occurs in a myriad of colors. The most common colors seen are red, pink, orange, blue, and purple. Occasionally, they occurs an alexandrite-like spinel, which changes from amethyst to blue. The most desirable spinel is red/orange, although some collectors prefer red/pink. When searching for pinks, search out electric or neon colors. Regarding oranges, look for an intense orange without a noticeable brown. The colors should be vivid.
Spinels that are pastel in color or garnet-like spinel-red stones with dark tones and obvious brown trade for considerably less money. Beware of theses stones being sold on the internet where the photos have been touched up with graphic programs.
Present Burmese Market
In 2003, President Bush signed the Burmese Freedom and Democracy Act and banned the importation of Burma gemstones. The amount of these goods into the US has decreased dramatically and prices are skyrocketing. In Burma, prices are up as well. Top gem quality reds and pinks are difficult to even find. Even carat stones are rare and difficult to buy. The largest size you can see is between 2 and 3 carats. Larger sizes are available but sure enough not of the right color and they are very expensive.
A dealer who wishes to remain anonymous said, "Although I have no numbers on Mogok production and I can only quote what people say- production is way down because the few areas of Mogok were closed by the military, and they are instead producing uranium now. Few know, Burma has its own nuclear program." To make matters worse, he continues, "A Russian arms company has opened offices in Yangon and, in addition, North Korea has resumed its diplomatic relations with Burma." These events indicate even fewer spinels will be available and prices will continue to rise.
The best examples of these goods are from Burma. The stones have always come from the Mogok area. In 2002, some red spinel from the Kachin State in northern Burma debuted at the Tucson Gem show. Although not gem red, they are a vibrant red/pink. The new spinels also occur in bright, diamond-like pinks and purples. Prices were high but it looks like this area is not producing any longer. Interestingly, the Mong Hsu area was never known for producing any spinel.
Spinel is also mined in Sri Lanka, Africa and Russia. Rarely, spinels are seen from Viet Nam. With few exceptions, these gems are not as intense as the Burma spinel. Typically, other source spinels are pale in color and very inexpensive.
In Burma, gem reds in 2- 3 carat range cost $2000 to $3000 per carat. Expect to pay more for these goods in the United States. Any gem spinel over two carats is rare and any ten carat sized gem spinel is practically nonexistent. Recently, some spinels have been cut into calibrated sizes so manufacturers can now buy some of these gemstones. As with all Burma goods, the stones are usually cut into cushions and ovals.
The main market for fine Burma spinel are collectors and people who enjoy owning a different gemstone. However, these stones also offer an exciting alternative to clients who do not have the money to buy an unheated Classic Burma ruby. A recent trend is engagement rings with top color spinels.
Ruby, to the eye, looks very much like spinel, but not all spinel looks like ruby. Only the gem reds, hot pinks, and flame oranges deserve this honor. As a matter of fact, many dealers believe these spinels are actually MORE beautiful than ruby. Burma spinel is relatively inexpensive compared to some gems that are less attractive and more abundant. The only reason is the lack of market exposure. Most people are unaware of the existence of spinel, much less its intrinsic value. It has been estimated these gems are 200 times more rare than ruby, possess more fire (dispersion), and are available for about 10%-25% of the price of rubies. Based upon the desirability and rarity of this stone, the sky truly is the limit for future price appreciation.
by Robert Genis
After deciding he wanted to add a red diamond to his portfolio, an extremely wealthy collector found one he wanted and told the dealer he wanted to "think about it while he went on vacation." On return two weeks later, the buyer called the dealer, ready to buy the diamond. "Wait a minute," the owner said. "I now want $100,000 more per carat since the last time we talked." Despite the dramatic increase in price, the collector bought the stone. This is probably the only diamond or colored gemstone market where such stories are not unusual. Welcome to the world of red colored diamonds where prices are in the millions and available stones can be counted on your appendages.
Famous Red Diamonds
The earliest known red diamond was the one carat Halphen Red owned by a London gem dealer. It was sold in the late 18th century and has since disappeared. The most famous Brazilian red diamond is the purplish red .95 round known as the Hancock Red. It was named after William Hancock, a collector who reportedly paid $13,500 for the stone in 1956. The .95 red stone made worldwide news when it was sold at Christie's in 1987 for $880,000 or $926,000 per carat. William Goldberg cut a new red diamond from a 13.90 carat Brazilian rough. They transformed the piece into a 5.11 shield in the mid-1990s. It is presently owned by Moussaieff Jewellers of London and is occasionally displayed in public.
Why are reds red?
Although not perfectly understood by gemological science, reds are created by a rare deformation in atomic structure. According to Stephen C. Hofer, author of Collecting and Classifying Colored Diamonds, "Red diamonds are associated with Type- IA nitrogen rich diamonds. Pressure is applied to these diamonds and it creates a graining which leads to the red color."
How many Red Diamonds are out there?
Some dealers guess there are 10-20 straight reds in the world. The most anyone will see is one or two straight reds a year and slightly more purplish reds per year. Most red diamonds and purple reds come from Australia but they may also be discovered in Brazil and Africa.
All Reds Are Not Equal
Some reds are better then other reds and many argue about what even constitutes red. Red is in the eye of the beholder. Some are a purer red than others and some have lighter or darker tones. Buying a red diamond is a combination of reading the GIA cert, looking at the stone and understanding the nuances. Some red diamonds have gone to auction and did not sell after the Hancock red. There was a reason they did not sell. It was either color, clarity or shape. In other words, they did not have curb appeal.
Reds in Different Lights
Red diamonds look different in various lighting environments. They look the best in incandescent light, daylight and candlelight. They look the worst in fluorescent lights. Interestingly, blue colored diamonds are the exact opposite of reds in these different lighting conditions.
Besides fancy red, these diamonds can be found purple-red and purplish red. These colors are extremely desirable. The purple reds are more likely a more vibrant cherry color. An orangish red is also possible although few dealers have ever seen this combination. The worst modifier is brownish red and they sell for a serious discount to the straight reds. However, reds with brown can be a unique color for certain collectors.
Pricing Red Diamonds
You have to think a million dollars plus per carat for a straight red carat sized diamond. You have to think in the high 6 figures per carat for a nice purple red. Of course, we are talking gems here without any problems. For example, bad clarity can cause these prices to drop. The reason straight reds are more money than the purple reds are not based upon visual beauty. The idea that one pure color is best in colored diamonds was transferred to the reds. If you think about the other colors in colored diamonds, everyone wants the pure color, even if the modifiers are more attractive.
In December, 2001 at Phillips, a 1.92 carat fancy red VS2 clarity diamond sold for $1,652,500 or $860,677 per carat. This was slightly under the Hancock Red price per carat. According to the owner of the stone, "I was offered more for the stone before 9/11. I like to say the sale was the largest I have ever made but I lost a million dollars."
Rob Red Diamond
One of the rarest diamonds in the world is the pear shaped .59 fancy red VS1 Rob Red. According Hofer, "The Rob Red is the most saturated and purest red diamond measured visually and instrumentally to date in the world." Surprisingly, Hofers's measurement exceeds the saturation of red in the Hancock Diamond. Hofer contends that the .59-carat Rob Red should be given a fancy intense red color grade. The GIA has never given a fancy intense or fancy vivid red diamond color grade. The GIA might give these grades if the stones looked like a top quality Burma ruby. So far, fancy intense red and fancy vivid red color grades are purely theoretically.
2006 Australian Pink Diamonds Tender
This year's Arygle Australian fancy colored diamond tender includes 60 diamonds. Arygle's total diamond production is approximately 30 million carats. The only GIA graded red in this years tender is a .54 fancy purplish red I1 clarity. If you think about it, one red diamond is the year's entire production.
Market Conditions and Predictions
Due to the fact these diamonds are so rare, it is very difficult to accurately monitor the red diamond market. However, after the Hancock sale in 1987, prices continued to escalate with the Japanese being strong buyers until the 1990's, when their economy went downhill. Prices for these goods dropped until 2001 until the US economy picked-up. Prices are strong today.
It takes a sophisticated collector or connoisseur to hunt one of these diamonds down. A red diamond buyer is someone who wants something no one else in the world has. The red diamond market is probably one of the few where the sellers have remorse because they know these stones are irreplaceable.
Many in the industry expect these diamonds to keep rising in price. The interest in red diamonds is expanding. The Aurora collection and the Smithsonian have really helped more people see these goods.
Red diamonds are freaks of nature that may have taken millions of years to be created. Red is the rarest and most desirable diamond color. These stones are so exceptional, even small diamonds under a carat are sought after by sophisticated collectors. Anyone interested in colored diamonds should go see one if given the chance.
AGL was founded by C.R. "Cap" Beesley, who is a Graduate Gemologist of Gemological Institute of America and a recipient of numerous awards including the prestigious Antonio C. Bonanno Award for Excellence in Gemology from the Accredited Gemologists Association, given annually to the individual who has made significant contributions to the field. Mr. Beesley, President of AGL since its founding in 1977, is joining Collectors Universe as President of AGL, which will be operated as a wholly-owned subsidiary of the Company. Prior to founding AGL, Mr. Beesley held positions for more than nine years with the Gemological Institute of America where he developed the first colored stone grading course and curriculum.
Chief Executive Officer of Collectors Universe, Michael Haynes commented, "The acquisition of AGL represents a further step in the implementation of our strategic plan to enter the diamond and colored gemstone authentication and grading businesses, the two primary high value jewelry markets. We are extremely pleased to be able to execute on this strategy by acquiring AGL, which is one of the most highly regarded companies in the colored gemstone market. Additionally, we have been able to secure Cap Beesley's unmatched experience and knowledge as president of AGL. With AGL joining our diamond authentication and grading service, we are continuing our 'best of breed' philosophy in our operations and leadership in all of our existing markets. We believe, moreover, that with the addition of the knowledge and experience of AGL and Cap Beesley to our existing expertise in diamond grading and authentication, we now have assembled the intellectual capital and jewelry market recognition to further extend our expertise into the major markets and distribution channels of the jewelry business."
The certification of colored gemstones requires not only the color and clarity examinations required for diamond certification, but also analyses for the enhancements on and determinations of the country of origin of the colored gemstones. Unlike diamonds, almost all colored gemstones have received some form of enhancement and the nature and quality of the enhancement can have a dramatic effect on the value of a colored gemstone and, therefore, are important disclosure elements in the grading process. Country of origin also can have a dramatic effect on the value of a colored gemstone, with value differences of up to 300% based on the country of origin. With the acquisition of AGL, Collectors Universe now has one of the largest colored gemstone reference collections, with over 5,000 colored gemstones from various countries and specimens demonstrating the various enhancements and treatments, which is critical to the ability to accurately evaluate the nature and quality of colored gemstone enhancements and to determine the country of origin.
During calendar 2004, the U.S. Gemological Survey, through the U.S. Census Bureau, reported imports of 15.2 million carats of cut but unset emeralds, rubies and sapphires into the United States, which compares with U.S. imports in 2004 of 18.4 million carats of cut but unset diamonds. Other precious and semi-precious colored gemstones imported into the U.S. include amethysts, aquamarines, garnets, iolites, opals, peridots, spinels, tanzanites, topaz, and tourmalines.
Cap Beesley remarked, "I am very excited to join Collectors Universe and to have AGL become a Collectors Universe company. Throughout my career, I have always been an advocate of improved consumer information and disclosure and have had success influencing the markets with our third party certification. Now with the substantial resources, both financial and technological, and the reputation for integrity of Collectors Universe, I am confident that together we will bring the benefits of third party certification to many more thousands of retail transactions each year. I also am confident that the entire jewelry market will benefit from the application of the high operational standards and systems of internal controls that have been implemented and are employed by Collectors Universe through all of its divisions."
IN THE NEWS
Conspiracy, Bribery Charges Face Jeweler; Fed Official Under Arrest
By Jeff Miller
Kenneth Wainstein, the attorney of the United States in and for the District of Columbia, filed an indictment against jeweler Sunil Agrawal, CEO of STS Jewels, for bribery and conspiracy of a federal official following a two-year long investigation.
STS Jewels is a jewelry manufacturer and dealer based in Long Island City, New York. According to the company's website, STS Jewels has offices in Canada, India, Thailand, Hong Kong, Japan, Taiwan, Brazil, Dubai and Great Britain. Tanzanite jewelry is the company's specialty. Agrawal is also president of the Indian Diamond and Colorstone Association.
In court papers filed August 18, 2006, in the District of Columbia --which were sealed until August 25 pending arrests-- defendant Agrawal, and defendant Michael John O'Keefe were indicted for three counts of bribery and conspiracy. As of August 25, O'Keefe had been taken into custody, and Agrawal was last reported being seen in London, for which the United States has sought a provisional arrest warrant as of press time.
While Agrawal holds lawful, permanent residence status in the United States he has, according to the Federal prosecutors, also sponsored employees for visas in support operations of STS Jewels.
State Department Consulate official (Mike) O'Keefe, conspired to, agreed to, and sought to receive and accept "things of value" from Agrawal in exchange for O'Keefe's favorable performance as an official of the United States government. O'Keefe worked out of the United States consulate in Toronto, Canada.
Items investigators found Agrawal gave O'Keefe, included hotel stays in Manhattan and in Las Vegas, Nevada, round-trip airline tickets between Toronto, Canada, and Las Vegas; two exotic dancers (sessions,) jewelry, meals, entertainment, and a job reference. O'Keefe in return provided Agrawal expedited interviews for issuing visas and benefits to 21 employees plus renewal visa benefits, which is in violation of Title 18 United States Code: Sect.201(b)(1) and (2.)
In all cases, Agrawal would provide the names of STS Jewels employees in need of visas to O'Keefe via e-mail or fax.
At first, in early 2004, O'Keefe was scheduling STS Jewels employee appointments and he handled the application process and interviews personally and expedited the paperwork. O'Keefe approved all visas sponsored by STS Jewels, and as more requests came in from Agrawal through year 2005, O'Keefe eventually dropped the appointment requirement and simply granted the visas and approved some that had been rejected.
Planning for New York
In one e-mail captured by investigators at some point in-between December 17-21, 2004, Agrawal wrote to O'Keefe: "Mike, Thanks for the mail. The Ring was ready on Friday but I asked them to hold off [un]til you are back. Thanks for your greetings. Best Regards, Sunil Agrawal." Agrawal then proceeded to arrange car service from an airport to a hotel for O'Keefe's planned January weekend stint in New York City.
In response O'Keefe wrote in e-mail: "Sunil, I just wanted to drop you a line to let you know that I have returned to Toronto. We had a great holiday in Italy with my children...and I are looking forward to the trip to New York...it will be good to see you again. Please keep in touch and let me know if there is anything I can do from this end. Mike O'Keefe."
Agrawal responded in e-mail asking whether or not O'Keefe's son received candy and fruit sent to his military base for the Christmas holiday, and confirmed booking two rooms at the Hilton Millennium in Midtown Manhattan, and said "Your ring has been sent out today to your home address."
In subsequent e-mails, O'Keefe said his son did not receive the gift, and confirmed he'd received a ring valued at about $3,000. O'Keefe added, "I should have asked you to send it to a U.S. address that we use as the Canadians' hit me with tax and customs duties on the ring. I had to pay $262.65 before they would give me the package." This ring was apparently a similar design to a ring O'Keefe said had been lost.
On or about January 5-6, 2005, Agrawal e-mailed O'Keefe confirming he'd faxed the name of an employee that is "seeking and early appointment for H1B stamp...I would appreciate if you could give us appointment before your New York visit."
O'Keefe followed-up saying he hadn't received the fax, but pulled the case and "approved it so your people should be getting a call today telling her she can have an expedited appointment...In the future just have someone call me and let me know that the fax is coming. I will be interviewing her and I don't foresee any problems."
Agrawal received notice his employee would have the H1B appointment January 12, 2005, and offered O'Keefe the following message: "I was wondering what kind of Broadway show you would like to see? I am scheduling the dinner and show on Friday, the day of your arrival in New York. Sunil."
On January 12, O'Keefe issued a visa to STS Jewels' new employee sponsored by Agrawal. A second appointment was arranged for another employee on January 14, to which O'Keefe approved.
Between January 20-21, 2005, O'Keefe arrived in New York and Agrawal supplied two exotic dancers for the weekend, according to the court documents.
Agrawal paid for O'Keefe's hotel, Broadway show tickets, and transportation, to which investigators estimate in value at almost $2,000. Prosecutors did not release the names of the dancers.
You are such an experienced and capable diplomat...
Agrawal requested two more visas between January 24 and March 3, 2005, which O'Keefe approved on March 10. On or about May 31, 2005, O'Keefe issued visas to three new STS Jewels employees and family members sponsored by Agrawal.
On July 19, 2005, O'Keefe asked Agrawal if he'd agree to be a job reference for a position at Southern New Hampshire University. Agrawal agreed and added, "You are such an experienced and capable diplomat that US government should do their best not to lose...Add to that such issues as al Qaeda. Thanks for vouching for STS."
While the reference to al Qaeda may seem out of the blue, actually Agrawal's company had been named in a wrongful death lawsuit by family members of September 11 victims in February 2002. The lawsuit was dismissed in April 2002. Plaintiffs alleged ties existed between tanzanite trading (STS Jewels) and al Qaeda, but the court ruled there was not enough evidence to support the charge.
In August 2005, O'Keefe issued three visas to STS employees. On August 28, O'Keefe wrote to Agrawal that he would be happy to issue the visas to "your other H1 holders....I have no problem with these cases...I will waive the appointment and then adjudicate the case myself....I have been a diplomat for 22 years and I find myself growing tired of argument over visas.
"The young Vice Consuls who work for me seem to be determined to find problems. They wanted to turn down one of your employees because he was in the jewelry industry and everyone knows that al Qaeda uses jewelry industry to raise funds. Needless to say I overruled the decision and explained to them that major gem importers such as STS are not being used by al Qaeda...."
Even though, O'Keefe had thanked Agrawal numerous times for the January trip to New York, he did so again on September 12 when O'Keefe approved four more visas for STS Jewels. On or about October 6, O'Keefe issued two more visas.
As Christmas 2005 approached, O'Keefe asked Agrawal for some advice. "I am in the process of trying to find my wife something for Christmas. As you recall she is somewhat of a jewelry hound. I am looking for a necklace or a pendant with an 18 to 24 inch length. Unfortunately I only have about $300 to spend this year..."
Agrawal suggested "something in ruby to match the ring or Tanzanite to match the other ring." He also "reiterated" an invitation to O'Keefe for hosting him at the JCK Las Vegas Show coming up in June 2006 along with the two exotic dancers.
A ruby ring it was. Although no date was logged for when the ruby ring was shipped, on December 8, 2005, O'Keefe told Agrawal that his wife liked the ruby ring and said he'd would write a university recommendation letter for Agrawal's son.
Preparing for JCK Las Vegas 2006
In February 2006, O'Keefe waived two appointments and issued two new visas for STS Jewels employees. During March, O'Keefe reminded Agrawal about the JCK Las Vegas invitation through e-mail and Agrawal replied that: "It will be my pleasure to sponsor your visit to Vegas. Please let me know the dates and I will organize your flight ticket and hotel stay....One evening we have Indian [Colored Gemstone] event and we would like to invite you there. Another evening there is an industry charity dinner [Jewelers for Children] and you are invited there on STS table."
On March 28, Agrawal asked O'Keefe for approving five H1 renewals for managers at STS Jewels. "Could they visit Toronto around mid April for this process?...Please confirm the dates you would like to visit Vegas for JCK show and I will organize the ticket and hotels for you."
O'Keefe e-mailed and said that mid-April was fine, because at that point he would be chief of the consulate in Toronto. He also wanted Agrawal to confirm that if he went to Las Vegas that the two exotic dancers would be available.
Sometime around April 3, 2006, O'Keefe informed Agrawal that there had been an issue of rejection for five visas, but that he took care of the problem.
Agrawal reserved rooms at the Mirage Hotel in Las Vegas for O'Keefe and two exotic dancers from June 3 to 7, 2006 for about $1,940. An additional $1,527 was charged to Agrawal's American Express card for three airline tickets from Toronto to Las Vegas. O'Keefe issued three new visas to STS Jewels employees on April 19.
During the JCK Show 2006, Agrawal hosted O'Keefe and the dancers and paid an additional $1,000 in room charges for the trio.
The Party Ends
On June 28, O'Keefe issued another visa to STS Jewels, and in July -- O'Keefe e-mailed the two exotic dancers informing them they each would be receiving a ring from STS Jewels shortly.
The United States determined there was sufficient evidence to charge O'Keefe and Agrawal with conspiracy to commit bribery, and aiding and abetting, causing an act to be done.
Prosecutors say that O'Keefe, being a senior public official, did directly and indirectly, corruptly demand, and seek, receive, accept, and agree to receive and accept from defendant Agrawal. In return for being influenced in the performance of an official act, that is, expediting the handling of applications for and issuance of visas to STS Jewels employees in exchange for bribes.
For Agrawal, prosecutors determined that he directly and indirectly, corruptly give, offer and promise to give things of value to influence the public official in the performance of an official act, that is, the expedited handling of applications for and issuance of visas to STS Jewels employees in exchange for bribes.
Prosecutors request forfeit to the United States all property constituting or derived from proceeds obtained directly or indirectly as a result of the said violations, including, a male ring, a ruby pendant or necklace, a female ruby ring, a female tanzanite ring, and a sum of about $5,000 representing the amount of proceeds obtained as a result of the offense(s) of: conspiracy, bribery and aiding and abetting.