The Diamond Stinger

By: Uri Shitrit

In 1988, a diamond polishing workshop opened up at “Ma’siahu” prison. Its establishment was approved by prison service representatives as part of a rehabilitation program geared towards select prisoners. Jacob Dezanshvili (fabricated name) founded the polishing workshop. According to the agreement with the prison services, the owners of the workshop promised to train the prisoners in the craft of diamond polishing and pay their wages.

At the time, a governmental agency called “Foreign Trade Risk Agency” insured the exportation of diamonds and even paid an incentive premium to diamond traders in order to encourage them to increase their productivity and international exports. A premium arrangement was made between the insurance company and the diamond export.  According to that agreement, the value of the premium was a set percentage of the total value of the exported diamonds.

The incentive arrangement was the basis for the sting operation led and successfully executed by diamond dealer Dezanshvili. Familiar with the level of control and supervision maintained by governmental agencies, he crafted a simple, yet sophisticated, fraud plan worth $250,000.

In the summer of 1989, after the “Ma’siahu” diamond polishing workshop had been operating for a while, Dezanshvili decided to shut the workshop down. He explained to the prison service representatives that it was not possible to make a profit this way, and that it was not financially worthwhile for him to continue operating the workshop in its current state.

He was offered alternative arrangements, but he turned them down. The rehabilitation of prisoners no longer interested him. He was much more interested in deceptively getting money from an insurance company whose guard was down.

At the end of 1990, I was appointed an intelligence officer in the National Unit for Fraud Investigations. A few months later, I was called in for a meeting with one of the highest quality informants I had used that year.  “Listen to this story”, the informant began.

“There’s this Georgian guy called Dezanshvili who opened up a diamond polishing workshop in a jail and then shut it down, and now he continues to report it as if it still operates and he’s been receiving premiums of hundreds of thousands of dollars for over a year.”

“That’s all you’ve got?” I asked the informant. “I don’t have any more information. See how you can go further with the story,” he suggested.  We parted ways. I returned to my office at the unit and dived into this challenging case.

A secret examination (performed with the help of a senior representative in the prison services) revealed that there had been, in fact, a diamond polishing workshop at “Ma’siahu” run by Dezanshvili. The workshop had closed down a year and a half ago, I was told. I thanked the senior representative and came to realize that there was a basis for the tip I had received.

I made an appointment for that day with the head of the department responsible for diamond exportation at an insurance company. I didn’t give him the real reason why I urgently called the meeting.  At this stage, I preferred to be suspicious even of my own connections in case there had been cooperation between the wealthy diamond dealer and a governmental clerk who may have been easily tempted by bribes.

At the suggestion of the head of the intelligence department, we built a cover story that convinced the director of the appropriate division at the insurance company to show me the books concerning the diamond polishing workshop run by Dezanshvili. Collection of these documents and financial analysis of the payments transferred to Dezanshvili, the imposter exporter, confirmed our suspicions once again.

The insurance company was completely unaware that Dezanshvili had closed his workshop a year and a half earlier, and that he was still reporting it as if it were operating. In return for the exportation of diamonds on paper alone, Dezanshvili demanded and deceptively received the export incentives for the duration of the entire period - a sum that came to $250,000.

Upset by this discovery, the director of the division didn’t know what to do with himself.  “How can this be? How did this happen to us?”  The answer do his desperate questions lay in the financial reports he was holding.  Only at this point did I decide to share with him all the information at my disposal. The director of the company was updated on the developments, and required to keep the information a secret (and not share the information with other employees, either).

The next day, in the middle of preparing ourselves to search the home and offices of suspect Dezanshvili, the informant who first provided me with information on the case informed me that “the Georgian guy has escaped and gone overseas”.  Instead of speculating about how the suspect knew he was being investigated and who leaked the information to him from the investigation department, a decision was made. 

We decided to ask the courts for a warrant to secretly audio bug Dezanshvili’s house. The warrant was granted. During the first week of our audio bugging we were able to locate a phone number that the suspect’s wife had called and, with the help of a representative of the Israeli police in New York, we were able to track down the residential address in the United States where Dezanshvili was staying.

We did not consider the option of giving up on this manipulative diamond merchant. An escape overseas would not allow him to escape a trial. We were determined to have him stand trial and face justice in Israel. The International Department of the state of Israel’s Attorney’s Office received all of our investigation materials and was convinced that the suspect was extraditable.

An international warrant for arrest of the subject was issued, according to the extradition request. A team of New Jersey Police investigators arrested the suspect at the address provided by the police representative in New York. Dezanshvili was arrested according to the court issued warrant. Dezanshvili spent eight months in the local prison before the American Minister of Foreign Affairs signed the extradition release. 

As the person who directed the case investigation, I was asked to go to New York in order to bring the suspect to trial in Israel. On the day of my return flight, I signed for the “package”, which was wrapped in chains and cuffs from head to toe. The flight attendants were shocked by the appearance of the suspect. I calmed them down by assuring them that this was no rapist or murderer, but rather a white collar criminal. One of the unit’s investigation teams was waiting for us at Ben Gurion Airport in order to take us to continue the investigation.

The suspect did not cooperate at the investigation at the unit. He was not moved by any of our persuasion or pressure techniques. Instead of answering our questions, he complained of chest pain and said he was on medication. A doctor who examined him authorized his hospitalization. In his investigation conducted at the hospital, he still refused to admit to the actions attributed to him.

The suspect’s silence did not do him any good. The case was supported by hard evidence, which made it easier to write the harsh indictment against him. Close to the beginning of the trial, the suspect agreed to a plea bargain. The court sentenced him to two years imprisonment and a financial penalty.

To the best of my knowledge, Jacob Dezanshvili no longer works in the diamond polishing business and the prison service representative never reopened the diamond polishing workshop.