How did the Russian diamond fraud go unnoticed for so long?

Interestingly, as with many audacious frauds and schemes, it occurred primarily because of the vulnerability in the system that they were able to exploit to reap such unprecedented profit. 

The key question to explore is just how were they able to constantly and consistently dupe and make a fool out of the most prestigious diamond certification institution in the world over an extended period of time?

With hindsight, it seems obvious, but the answer is a very simple fundamental scientific truth:

What Scientific Truth Was the Spark of Suspicion?

Down to the atom, mined diamonds are EXACTLY the same as Lab grown diamonds!
Was that the full extent of the scheme? Of course not! But worry not since we promised you that we would expose all!  

One of the largest Russian wholesalers in the world at the time, regularly sent in considerable number of diamonds, mined of course, to the trusted laboratory to be certified. Gradually they intermixed in some clear lab diamonds to test the water and see if the lab could be fooled. With the realisation that the most advanced diamond certification lab on the planet could not differentiate between them, the Russian wholesaler started mixing in lab created diamonds with their regular shipment in earnest and in scale to fully exploit the fact that lab grown diamonds can now be made clear instead of the universally assumed yellow colour.

What led to the discovery of the Russian diamond fraud?

So how did it eventually come to an end? How did such a seemingly foolproof and sophisticated operation get discovered and, eventually, exposed?

In order to fully understand how they were discovered, it is necessary to lightly go over a bit of math and science. 

“Type IIA” are what all man made diamonds are. What this label signifies is that since the stones are being made in a fully controlled environment with precise parameters, they are never exposed to oxygen, which, naturally, means that there is no oxidisation in the chemistry of the diamond. However, such coveted oxidation free diamonds are incredibly rare in nature with only about 2-5% of mined gem quality diamonds labelled as “Type IIA”. This fixed rarity was the crucial key that was instrumental in unravelling the Russian operation. 

Inevitably, as time passed, the increasing quantity of man made diamonds as mined ones through the certification lab, discrepancies in the probabilities started to be noticed and, thus, suspicions were raised.

It became apparent that to the lab, when they observed that there were simply too many “Type IIA” diamonds coming from just one individual supplier which was statistically impossible. Further investigations eventually uncovered the truth and, predictably, the whole diamond industry was shaken to the core.

It is unknown how many countless man made diamonds were certified as natural and are still circulating the market. But it must be said, that the Russian company had a very successful and immensely profitable run so the number could be substantial.

How did the industry react to the scandal?

The claims sounded incredible farfetched and too unbelievable so at first, everyone doubted their validity.

However, soon enough, the rumours were proven true when we, as one of the top leaders in the diamond industry, received official confirmation from the conglomerate when they presented us with an action plan. The confirmation pressured us to cease all communication and business with the Russian wholesaler as they were now permanently banned from the entirety of the diamond industry for life.

This entire operation is particularly significant because it bought lab created diamonds to the forefront of the industry from the sidelines. This is due to the realisation that man made diamonds were no longer confined to the being second class gems. In fact, lab made diamonds can now be made indistinguishable from natural diamonds, and in increasing occurrences, exceed their quality. However, it would take another year before the first legitimate lab grown stones were accessible.

Why was there a cover-up of the scandal?

As you can already imagine, the entire scandal and the sheer scope of it was an incredible and permanent blow to the mined diamond industry. For starters, there is already a large number of man made diamonds certified and sold to the market as naturals currently in active circulation. Not to mention that even the most prestigious lab in the world could not differentiate between lab grown and mined diamonds, and thus, letting countless undetected stones slip through their fingers. 

Everyone in the mined diamond industry were left humiliated as they had been taken for fools in addition to being financially gutted. For this reason, there has been a concentrated effort to cover this scandal up.
 

Why come out with the story now?

We believe we have a duty to provide our customers with the real insights and inside scoop. Our core principle is to be always transparent and open, disclosing all that we know about the industry. 

Unlike other companies, Novita Diamonds has open communication with our customers and we exclusively deal with man made diamonds due to our commitment to the health of the planet and its inhabitants, while our competitors dabble in both. Naturally, this makes them biased and in their best interest to not reveal controversial stories like this as to not negatively impact their bottom line.

We hope you enjoyed this read and came away with a deeper understanding of the diamond industry. If you enjoyed this or thought it was informative then please share this article with your friends, family and significant other. Who know, you might have something interesting to talk about and discuss with them in the next party or get-together, be it face to face or virtual! To keep on enriching your knowledge continue to our lab grown diamond rings guide, where our expert gemmologist explain everything you need to know about lab diamond rings.

In summary

A Russian diamond wholesaler committed massive fraud by mixing lab made diamonds with mined diamonds, deceiving the world’s most reputable diamond certification lab. The scandal shook the diamond industry, leading to the realization that lab created diamonds can now be made indistinguishable from, and even exceed the quality of, natural diamonds.