According to Sherman by allowing the use of the name “Paraiba” to be used for stones produced outside of Brazil—in locations as far away as Mozambique and Nigeria--the AGTA has failed to do what their charter requires of them. This has diminished the value of the rare gems and Sherman has suffered devastating financial losses because of the AGTA’s actions and those of others named in the suit.
Gordon Austin, who writes often for gem industry publications, Sherman he has been a champion of Paraiba tourmaline for much of the past two decades. For seven-and-one-
The neon-blue stone comes from near the village of Sao Jose’ da Batalha in the state of Paraiba, Brazil, where Sherman mined it. “Authentic Paraiba tourmaline holds its neon color in stones as small as one-millimeter in diameter,” says Sherman. “But even without a trained eye people can see it is different from tourmaline mined elsewhere.”
The Paraiba stones were of limited number. The Paraiba mine and the adjoining mines in the Brazilian state of Del Norte soon ran out of recoverable quantities of gemstones. As a result, the value of the existing stones maintained at a high level of value and the value of the remaining stone were of increasing value as time passed.
Braziol Imports (BI), one of the defendants, and some or all of the individually named defendants in the present action, began to import, sell and distribute the African stones throughout the United States. These stones were fraudulently represented as being Paraiba stones when, in fact, the stones were neither from Paraiba nor of the same, unique chemical composition as a true Paraiba gemstone. These sales were for the purpose of inflating the price of the inferior stones by defrauding the public into believing the African stones were of a higher quality and were from the Paraiba area of Brazil.
The African stone soon began to flood the markets. The effect on the Paraiba stone market was to depress the prices for the real Paraiba stones. Additionally, the future value of the remaining Paraiba stones was diminished due to the belief that there was a virtually unlimited supply of such stones.
In approximately 2005, it became known in the jewelry industry that inferior African stones were being passed off by the defendants and others as Paraiba stones. To cover up their actions, Sherman alleges, the AGTA and the other defendants entered into a conspiracy: they agreed to redefine as a Paraiba stone any cuprous elbaite that contained copper and manganese. “They stood to gain a lot from what they decided to do,” says Sherman. “They had a vested economic interest in preventing lawsuits for fraud, maintaining the value of the African stones, or in protecting the members of the gem association. AGTA had a clear economic interest in passing off of the African stones Paraiba stones.”
The AGTA controls certifications and collects fees for providing them. In 2005, the AGTA and other defendants collectively decided to redefine term of Paraiba stones to include all cuprous elbaites regardless of place of origin. The AGTA used its power in the jewelry business as the final arbiter regarding the qualifications and certification of gemstones to widely disseminate the false information regarding the redefinition of Paraiba stones.
“What the AGTA did was wrong,” says Sherman. “We intend to go all the way,” says Sherman. “Ultimately, it’s the public that has been injured here. It’s in the interest of the gem industry in the long run to prevent this destructive sort of fraud.”
