A government auction was held on March 20 at the New Yorker Hotel near Penn Station, and the focus of the auction was confiscated diamonds.  The US Department of the Treasury used the auction to sell off diamonds seized from money laundering schemes, drug investigations and IRS Tax confiscations—with some of the diamonds coming from dealers within New York’s own Diamond District.

The auction drew more than 100 people, from diamond experts to curious folks.  It became clear very early in the auction that most of the people not in the diamond industry were there as onlookers, watching the activities of the bidders, who are very anxious in this economy to get good diamonds at the lower prices they can find at auction. 

Because of security issues, no diamonds were actually at the hotel.  Each lot was described in detail according to size, color, cut and clarity, but there were not even photographs of the diamonds.  Anyone from the industry who wanted to see the diamonds in advance and physically inspect them was able to do so earlier in the week at a separate location. 

There were several hundred loose diamonds up for auction, and they were divided into 121 individual lots.  Each lot was sold—with no minimum reserve—for anywhere between $4,000 and even over $10,000.  Auctions such as these are a very cost-effective way for diamond dealers to get high-quality diamonds.  However, with all of them being seized in various illegal operations, it is likely that at least some of them are blood diamonds.  Unfortunately, once a diamond is cut and polished, it is impossible to tell its origin.  The diamantaires purchasing the diamonds at auction can no doubt set and resell each piece for a profit, but there will be no ‘conflict-free’ label to go with it.  With the public’s heightening awareness of blood diamonds, it is a risk that diamond sellers must take, and, sadly, often make a great deal of money from it.

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