A diamond dealer from Manhattan, Manashe Sezanayev, 41, has been indicted on charges of grand larceny and fraud, accused of defrauding fellow diamond merchants by swapping genuine diamonds with lab-grown imitations.
The allegations suggest a sophisticated scheme involving false inspections and fake Gemological Institute of America (GIA) laser inscriptions.
Details of the Alleged Fraud
Sezanayev, who operates Rachel’s Diamonds in New York’s Diamond District, is charged with two counts of Grand Larceny in the Second Degree, one count of Scheme to Defraud in the First Degree, and three counts of Criminal Possession of a Forged Instrument in the Third Degree. The charges are connected to two incidents in early 2024 where he allegedly substituted high-value diamonds with lab-grown fakes.
According to the indictment, on February 5, 2024, a diamond merchant brought two diamonds valued at $185,000 and $75,000 to Sezanayev for a potential sale. Sezanayev allegedly swapped the genuine stones with lab-grown diamonds, recut and inscribed to mimic the originals, while ostensibly weighing them on his scale.
In a separate incident on April 2, 2024, Sezanayev convinced another merchant to bring a $200,000 diamond to his store, claiming he had a buyer interested in the stone. The merchant later discovered that his diamond had been replaced with a lab-grown imitation.
Background and Legal Proceedings
Sezanayev has a history of gemstone fraud. In 2017, he was among ten defendants arrested for defrauding diamond wholesalers out of $9 million, for which he served a year in prison and was ordered to pay $510,030 in restitution. Despite this, he continued his fraudulent activities, leading to the current charges.
Manhattan District Attorney Alvin Bragg highlighted the severity of the case, stating, “Diamonds are forever, but this alleged scheme was short-lived.” Bragg emphasized the expectation that merchants conduct business honestly and that those who exploit consumers will be held accountable.
Sezanayev pleaded not guilty to the current charges, with his attorney, Boris Nektalov, asserting, “My client is presumed innocent and he’s going to wait for his day in court.”
Legal and Industry Response
The case is being prosecuted by Assistant D.A. Ben Rose from the Financial Frauds Bureau, under the supervision of Assistant D.A.s Kofi Sansculotte and Jodie Kane. The investigation was supported by the NYPD Major Case Squad and the GIA, both of which played crucial roles in uncovering the fraud.
This high-profile indictment serves as a reminder of the potential for fraud within the diamond industry and the importance of ongoing vigilance to protect the integrity of the market. Jewelers should stay informed about such cases and adopt best practices to safeguard their businesses and clients.
Implications for the Jewelry Industry
This case underscores the need for vigilance and thorough verification throughout the trade. The use of lab-grown diamonds, while legitimate in transparent transactions, poses significant risks when used fraudulently. The ability to inscribe fake GIA numbers on lab-grown diamonds adds a layer of complexity to the detection of such schemes.
Jewelers are advised to implement stringent verification processes, including the use of advanced technology to authenticate diamonds both before and after transactions.
