Diamond firm ordered into liquidation after £1.2m scam
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A london diamond broker targeting “vulnerable” investors and mis-selling them fancy coloured diamonds has been ordered into liquidation by the High Court.
The company, which the High Court said was mis-selling investors fancy coloured diamonds at inflated prices, was ordered into liquidation following a petition presented by the Secretary of State for Business, Innovation and Skills to wind up the company on grounds of public interest.
The petition was issued following confidential enquiries carried out by Company Investigations, part of the Insolvency Service, under section 447 of the Companies Act 1985.
CDX Worldwide, trading as the Coloured Diamond Exchange, claimed to sell the most sought-after investment grade stones in the world and said “its mission was to provide investment opportunities which have been largely unavailable to private investors”.
The court heard how fancy coloured diamonds were marketed and sold to the public as an investment opportunity using cold calling techniques.
Investors were sold coloured diamonds for investment at markups of over 550%, but according to the High Court were unable to make further contact with the company afterwards.
The High Court said available records show there were 77 sales to 49 individuals, totalling in excess of £1.2m.
In some instances investors were falsely told that the company had been trading for over 10 years, that it was FSA/FCA registered and “was part of the Royal Exchange”, the court heard.
The company’s sole recorded officer, James Gilkes, informed the investigation that the company’s day to day business was outsourced to a marketing company run by a Sean McDermott but was either unable or unwilling to provide any details of the marketing company other than it was based in Dubai.
Chris Mayhew, company investigations supervisor, said: “This pressured sales operation was yet another scam outfit making false and misleading statements to persuade people to make near worthless investments.”
The London Diamond Bourse has published consumer advice developed with the Insolvency Service with the objective of preventing the public falling foul of “boiler room” scams purporting to sell highly lucrative investment diamonds. The advice can be found in the public area of the London Diamond Bourse website.
More information on the scam can be found on the government’s announcements page.
