Thomas C. Yonelunas, CEO of the GIA Laboratory, has resigned and four employees of GIA’s New York lab have been fired after a Board of Governors appointed committee has completed a review of the policies and practices at the GIA lab.

 

Earlier this year a lawsuit was filed against the GIA lab, Vivid Collection and two others by New York jeweler Max Pincione alleging the GIA has “upgraded” the grading of certified diamonds in return for payment. The case raised an uproar in the diamond industry.

 

In May the GIA’s Board of Governors formed a special committee to investigate the allegations in the lawsuit and any related business practices.  The special committee, in turn, engaged the law firm of DLA Piper Rudnick Gray Cary US LLP (DLA Piper) to conduct the review under the leadership of Thomas F. O’Neil III, a former assistant attorney for the District of Maryland.

 

While the GIA says it is continuing to defend itself vigorously in the litigation, the review found that new measures to “to fortify various facets of the grading process”.

 

They include the appointment of a Compliance Officer in the laboratory who will report to the general counsel and will oversee the enforcement of the Institute’s compliance policies

 

 “We conducted an extensive four-month review, during which we interviewed dozens of witnesses and reviewed tens of thousands of documents, including thousands of diamond grading reports,” O’Neil said.

 

Yesterday the board announced that the special committee completed the review.

 

This resulted in the personnel changes. Thomas M. Moses, G.G., has been named the new head of the GIA Lab, with the title of Senior Vice President, GIA Laboratory and Research.

 

The board added that Yonelunas was “not implicated in any violations of GIA’s Professional Ethics and Conduct Compliance Statement”. His resignation will take effect December 31 “to ensure a smooth transition of leadership”.

 

Ralph Destino, Chairman of GIA’s Board of Governors, said, “The Board was deeply disturbed by the claims asserted in the complaint, and we felt that we had a responsibility to ourselves, our clients, and the public to not only look into them but to also thoroughly examine all lab practices. That is precisely what we have done.” 

 

He went on to say they have “zero tolerance for any misconduct by employees of the laboratory” adding that it undermines the confidence in GIA’s ability to serve the diamond industry and ensure the public’s trust.

 

All GIA employees will be obligated to report all suspected violations of the Institute’s compliance policies to the new Compliance Officer.

 

But Destino feels that that the blame does not rest only on GIA's shoulders, but that ethical violations might have taken place by its clients too.

 

“Our policies apply with equal force to lab clients. We, therefore, will not tolerate any violations of our code of ethics by clients of the lab, most particularly improper attempts to influence the outcome of our grading reports. We have identified a small community of lab clients who are implicated in such actions and, rest assured, they will be dealt with swiftly and decisively.”

 

In his weekly IDEX Online Memo published September 23, analyst Chaim Even-Zohar wrote: “Many large companies will employ a specific person (preferably ex-GIA) that maintains the sole liaison with the GIA lab – only he/she will submit the stones to be certified.

 

“In some instances the submission may be followed or preceded by discussions with the relevant GIA lab supervisors (sometimes even during the cutting process itself the owner may be getting advice) and contacts are maintained during the grading process. Then there is this whole process of “second opinions” – additional submissions (more money), preview of certain grades on clarity, color etc. Opportunity to make comments (without costs) or resubmission (with costs).”