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.
Shamash told Chayto that he was calling on behalf of a woman who said she was Mrs. Mobutu Sese Seko, the widow of the ex-president of Zaire, now known as the Democratic Republic of Congo. Shamash said she "had a collection of uncut diamonds that she wished to sell," according to court papers. The war-torn African state is known for its diamonds, and Mobutu was infamous for plundering his country's assets, so it was plausible that his widow might have quite a nice collection.
In April, Chayto accepted Shamash's invitation for an all-expenses-paid trip to Marbella, according to court papers.
No deal happened on that trip. In fact, Chayto didn't even meet the woman. But a few weeks later, Shamash called Chayto again and told him that the purported Mrs. Mobutu wanted to throw a huge party for Congolese leaders and hand out precious watches and jewelry as party favors.
Court filings provide no explanation why the woman would buy diamonds when she first appeared as a seller. Through his Los Angeles attorney, Chayto declined to comment.
But according to court papers, Chayto began putting together a collection of gems to offer for sale. Most were owned by other people, but that is not unusual in the diamond trade. One was a 23.8-carat diamond, which Chayto claimed in court papers was worth $1.8 million.
That stone belonged to a New York diamond dealer named Ishaia Gol. And there was a 16.62-carat diamond worth $900,000, owned by Chayto and another New York dealer. There was also a 43-carat Burmese sapphire, along with a ruby-and-diamond necklace, diamond-encrusted Harry Winston watches, Bulgari watches with emeralds and a long list of other gold, platinum and diamond jewelry, according to court papers.
A 23.8-carat diamond is big, but not among the largest diamonds in the world. The Hope Diamond, for example, is 45 carats. That stone, on display in the Smithsonian Institution in Washington, D.C., once belonged to King Louis XIV, and legend says it brings bad luck to its owners. Even bigger is the 530-carat Star of Africa, one of the British crown jewels.
With permission from the various owners around the world to negotiate a sale, Chayto delivered all the gems to Shamash in Marbella in May and June to show to the woman, according to court papers.
In June, Shamash told Chayto that she wanted to buy them all. She would pay him 12.2 million euros ($14 million) and a 2.8-million euro commission -- totaling about $17.8 million at the current rate of exchange.
