Birmingham jeweler charged in diamond scam

November 15, 2019

 

A high-profile Birmingham jeweler known for representing Marla Maples, Aretha Franklin, Elizabeth Taylor and other stars was formally charged in federal court on Thursday, November 14, with wire fraud in connection with the false sale of a $12 million diamond ring.

Joseph DuMouchelle, 58, allegedly tricked a family friend and business associate into paying $12 million through a wire transfer for the purchase of a 77-carat diamond ring known as "The Yellow Rose," according to a criminal complaint filed on Friday, November 8, and unsealed on Thursday.

DuMouchelle is the president of Joseph DuMouchelle Fine & Estate Jewelry Buyers, Sellers, Appraisers and Auctioneers, with offices at 251 Merrill Street, in Birmingham, as well as Florida locations in Palm Beach and Naples, and a Fifth Avenue office in New York City. He is part of the DuMouchelle family that founded the DuMouchelle Art Gallery, a renown Detroit auction house and gallery.

Federal court records filed in Michigan and New York allege DuMouchelle owed clients in New York and Texas millions of dollars for jewelry he agreed to sell on consignment but failed to pay for or return to owners. The FBI began investigating DuMouchelle in May, after Thomas Ritter of North Dakota contacted the bureau in regard to the purchase of the $12 million diamond for which he never received.

An affidavit filed in the U.S. District Court for Eastern Michigan by an FBI special agent responsible for investigating white collar crimes details that DuMouchelle's wife, Melinda "Lindy" Adducci, is related to Ritter's brother-in-law and that the two men met about five or six years ago at a family wedding. The two began doing business shortly after, with Ritter providing money to buy jewelry that would be resold by DuMouchelle, allowing the two to split the profits.

Court records indicate that Ritter claimed DuMouchelle owed him about $430,000 from jewelry sales, and that DuMouchelle proposed buying the Yellow Rose diamond in January after he attempted to collect the money. Ritter told investigators that DuMouchelle said he could buy the diamond for $12 million and sell it for $16 million, for which Ritter would receive 75 percent of the profit.

The diamond was described as a "natural fancy vivid yellow emerald cut diamond in platinum and 18 karat yellow gold. The center diamond weighs 77.12ct and contains 5.27 carats of round brilliant cut yellow and white tapered and diamond baguettes. The ring is accompanied by a Gemological Institute of America (GIA) monograph book and given the name "The Yellow Rose."

Ritter told investigators that he agreed to the deal, which included the purchase of the diamond for $12 million. On February 6, Ritter wired $12 million to an account he believed was the connected to the owner of the ring, William Noble of Texas. However, the FBI said the account was connected to DuMouchelle's business, and that DuMouchelle used $4.25 million of the funds to provide partial payment for an estimated $12.5 million of jewelry DuMouchelle failed to return to Noble that he had previously agreed to sell.

Despite never purchasing or taking possession of The Yellow Rose, the FBI said DuMouchelle provided Ritter with a receipt for the diamond and in April and told Ritter that he had sold the diamond to a client in Bloomfield Hills. However, Noble confirmed to the FBI that he never sent the diamond to DuMouchelle nor did he agree to sell it to him.

About April 21, "Ritter traveled to Detroit to see the Yellow Rose Diamond for himself," the FBI said in an affidavit. "DuMouchelle told Ritter the diamond was being held at the Brink's facility in Detroit, Michigan. DuMouchelle picked Ritter up from the airport and claimed the person in charge of the Brink's facility was on vacation, so they could not see the diamond. Instead, they visited DuMouchelle's office located at 251 East Merrill Street, Suite 236, in Birmingham. While at DuMouchelle's place of business in Birmingham, DuMouchelle showed Ritter the book that accompanies the Yellow Rose Diamond. Ritter did not see the Yellow Rose Diamond."

Noble told the FBI he created about a dozen of the booklets for potential clients for the diamond, including one that he provided to DuMouchelle, which was never returned.

During the course of the investigation, the FBI also spoke with New York jeweler Jonathon Birnbach, who told investigators that he has done business with DuMouchelle for about a dozen years. He said that in November of 2018 he entered into consignment agreements with DuMouchelle to purchase more than $3 million in items which DuMouchelle was to sell at auction on consignment. To date, Birnbach said he received only $500,000 of the $2.5 to $3 million owed.

Outside of the investigation, New York-based East Continental Gems (EC Gems) filed a civil complaint in the Southern District of New York alleging DuMouchelle agreed to sell a diamond ring valued at $810,000. EC Gems alleges the ring was shipped to DuMouchelle on February 21, 2019, but has since failed to return or pay for the ring. That case has  since been stayed.

In October, less than a month before the criminal complaint was filed, DuMouchelle and Adducci filed for Chapter 11 bankruptcy, claiming they had about $2.3 million in assets and about $23.4 million in liabilities.

High profile clients and items that DuMouchelle has handled in the past include a 7.45ct diamond ring that Donald Trump gave to Marla Maples; a silver necklace sold for Elizabeth Taylor worn in the 1988 movie Young Toscanini; Matilda Dodge Wilson; Carolyn Farr Booth of the Scripps-Booth family; and others. For Aretha Franklin's 60th birthday party, DuMouchelle brought jewelry to show and sell. He also represented Nat King Cole's wife, Maria, in the sale of items from his estate.

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