Michigan Jeweler, Auctioneer Charged with Wire Fraud

CrimeNov 18, 2019

Michigan Jeweler, Auctioneer Charged with Wire Fraud

Federal investigators allege Detroit-area jeweler Joseph DuMouchelle faked the purchase and sale of a $16.5 million diamond.

Detroit—A prominent Detroit-area jewelry buyer and auctioneer has been charged with wire fraud involving millions of dollars.

A criminal complaint was filed Nov. 8 in the U.S. District Court for the Eastern District of Michigan against Joseph DuMouchelle, the 58-year-old owner of Joseph DuMouchelle Fine & Estate Jewelry Buyers, Sellers, Appraisers and Auctioneers in Birmingham, Michigan.

DuMouchelle is a fourth-generation member of the jewelry industry, according to his website, studying at GIA before working for the family business for a decade and then branching out on his own.

The criminal complaint outlines two situations involving the sale of high-priced items in which DuMouchelle was involved.

The first involves business with a distant family member.

According to court documents, DuMouchelle started doing business with Thomas Ritter, who is related to the brother-in-law of DuMouchelle’s wife, Melinda Adducci.

Ritter would give DuMouchelle money to purchase pieces of jewelry, and they would split the profits once the piece was sold.

The complaint states that by December 2018, the latter owed Ritter about $430,000.

In January, Ritter contacted DuMouchelle to collect but instead of paying, the jeweler presented him with an opportunity to make more money: buy and resell “The Yellow Rose Diamond,” a 77.12-carat, VS2 natural fancy vivid yellow diamond.

According to the complaint, DuMochelle told Ritter they could buy the stone for $12 million and sell it for $16 million.

Ritter agreed; he was to receive 75 percent of the profit, while DuMouchelle would get the remaining 25 percent. Ritter also indicated he wanted to wire transfer the $12 million directly to the seller of the Yellow Rose.

DuMouchelle approached Richard Drucker of Gemworld International to prepare a report on The Yellow Rose Diamond, which Drucker did.

What Drucker didn’t know, however, is that DuMouchelle was characterizing him to Ritter as a representative of the diamond’s seller.

According to court documents, DuMouchelle forwarded two different emails to Ritter that looked like they came from Drucker and contained wire instructions to bank accounts later discovered to belong to DuMouchelle and his wife.

An FBI investigator found by using the IP address that the emails had originated from the Detroit area and not Glenview, Illinois, where Drucker is based.

Court documents acknowledge that Drucker did not have any involvement in a transaction involving the yellow diamond, nor did he know who the buyer and seller were.

Drucker told investigators that he doesn’t normally do reports on

individual stones but agreed to put together something on the Yellow Rose Diamond and email it to DuMouchelle as a favor, as the two have known each other for decades.

In a statement to National Jeweler, he said: “I am aware of the complaint filed against Joseph DuMouchelle. The report I prepared at Mr. DuMouchelle’s request contained general information. It clearly stated I do not buy or sell jewelry and disclosed that I had not personally examined this stone. That was the full extent of my involvement in this matter.

“I was later informed that an email for wire information purportedly came from me. I did not send any emails regarding this transaction, I had no knowledge of the buyer or seller, and I was never a party to the transaction in any way.”

The investigation then led to William Noble Rare Jewels in Texas, which had consigned pieces to DuMouchelle and was also owed money.

By the end of 2018, DuMouchelle possessed approximately $12.5 million of Noble’s items, court documents show. In February 2019, another Detroit-area jeweler contacted William Noble to tell him his merchandise was being sold for 20 cents on the dollar.

DuMouchelle denied it and told Noble he had a customer interested in buying The Yellow Rose diamond.

He told Noble the buyer “would not allow him to take a profit” so he offered a $12 million price and asked Noble if he’d take $10 million for the sale and wire $2 million back to him.

Noble purportedly felt this wasn’t right and possibly illegal, court documents state, so he declined.

He told investigators he never sent the diamond, nor did he agree to sell it to DuMouchelle.

But that didn’t stop DuMouchelle.

In April, he allegedly sent Ritter an email with a copy of a contract for the purchase and sale of the Yellow Rose diamond for $16.5 million.

According to court documents, DuMouchelle told Ritter at the time that three wire transfers had been made by the purchaser in the amounts of $2 million, $4 million and $10.5 million, but no deposits or wire transfers of such amounts had been made, the investigation showed, as DuMouchelle had never actually bought or sold the diamond.

Also in February, court documents state Noble got six pieces he had consigned to DuMouchelle back, as well as a wire transfer of about $4.25 million for three pieces the latter said he’d sold for Noble.

But the investigation showed DuMochelle used proceeds from the $12 million Ritter had sent for the purchase of the yellow diamond—which Ritter thought was going to the diamond’s owner but actually went to the account belonging to DuMochelle and his wife—to pay Noble back.

According to court documents, Noble has made numerous attempts since February to reach DuMouchelle. Noble could not be reached for comment on the case by press time.

The second situation involves allegations of wrongdoing involving Jonathan Birnbach of JB International LLC in New York, who had bought and sold jewelry to DuMouchelle for years.

In late 2018, the two entered into a consignment agreement in which they would buy jewelry from estates and sell it for a profit at auction.

DuMouchelle told Birnbach 95 percent of the items sold at auction, but Birnbach indicated to the government he never received any proceeds.

To date, he has received only $500,000 of the approximately $2.5 to $3 million he is owed, the complaint states.

DuMouchelle did not respond to a request for comment by press time. An attorney has not yet been listed for the jeweler.

According to court documents, he is scheduled to appear in court on Dec. 5.
Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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