As Scams Go, This Is a Gem

Those not in the diamond trade might find it hard to understand why Emile Chayto, a Geneva dealer with more than 40 years of experience, gave $14 million worth of gems to a stranger who claimed to be the wife of the deceased president of the Congo -- before she had paid him one penny.

Unfortunately for Chayto, she was not the widow of Mobutu Sese Seko. And her wire transfer never arrived.

As it turned out, the handoff of the stones triggered a series of transactions -- detailed in lawsuits in Los Angeles and Israel -- illuminating a strange and glamorous trade in which millions of dollars' worth of merchandise crisscrosses the globe on the strength of spoken promises.

Since the Middle Ages, when it was one of the few areas of commerce open to them in Europe, the diamond business has been dominated by Jews, and even today, though traders from India are increasingly moving into the industry, deals around the world are sealed with the traditional Yiddish phrase mazel und brocha, which means "luck and a blessing."

Hebrew is spoken along Hill Street in Los Angeles, the country's second-largest diamond market after New York, where some of the parties involved with Chayto in the disputed trades have offices. Every day at lunchtime, deliverymen bearing kosher food pour into the downtown jewelry exchange, a glittering, bustling hive filled with tiny offices and storefronts.

David Marcus, president of the West Coast Diamond Club, a guild that arbitrates disputes among dealers and has its offices on the 16th floor of the exchange, said he knew, or knew of, most of the parties named in the lawsuits but that he hadn't heard much talk about the dispute itself.

That did not surprise him, he added. It was easy to see why all parties involved -- many of whom have excellent reputations in the diamond world -- would not want to broadcast details of such a fight, especially in a business in which reputation counts for so much.

"Look, I make a deal for millions, and all I do is shake hands. I don't even give a check. I give my word," he said. "Cases like this are very rare," he added.

According to court papers, the intrigue began a year ago, in February 2005, when Chayto was contacted by Albert Shamash, a resident of Marbella, Spain, a seaside playground of the rich on the fabled Costa del Sol.