The Chloe Diamond: An Intriguing Story (or A Story of Intrigue?)

Posted in: Jewelry History, Auctions/Results

A Superb & Extremely Rare Unmounted Brilliant-Cut Diamond Weighing 84.37 Carats. Photo © Sotheby's 2007. by Angela Magnotti Andrews This distinctive diamond, described by Sotheby's as "a superb and extremely rare brilliant-cut diamond...with the highest possible grading from the GIA" {19} was most recently sold by Ron Cohen through Sotheby's Geneva on November 14, 2007. The Chloe Diamond sold for an impressive price of $16,189,769 million, ranking it #9 on EraGem's Top Twenty Diamonds & Jewels Sold at Auction.

A Country Rich in Resources

While the Chloe Diamond's earliest history begins far underground, well before dinosaurs walked the earth, this intriguing chapter of its history opens in Angola in the early 21st century, when miners from Endiama Mining found a giant piece of diamond rough weighing 365 carats. Based in Luanda, Angola, Endiama Mining is the country's state-run diamond operation, the only Angolan diamond mine allowed to trade in diamonds. Angola is a country rich in resources. In 2010, 8.55 million carats of diamonds were unearthed, which sold for a staggering $956 million {16}! Considered the 3rd-largest source for African diamonds, Angola is also the "second-biggest oil producer in sub-Saharan Africa, turning out more than 1.9 million barrels per day" {23}. With this much treasure lying underground, Angola has been a popular topic of late, particularly in circles concerned with the ethical distribution of diamonds.

The Peoples' Republic?

Angolan diamonds are notoriously linked with the uproar against blood diamonds, as they were used in both sides of the civil conflict which raged in the African country for over 25 years. Since its inception, Angola has been ravaged by war, beginning in the 1950s when the Angolan Communist Party (PCA) first formed in 1956. Their mission: To overthrow Portuguese rule. The party eventually merged with other groups to form the Peoples' Movement for the Liberation of Angola (MLPA), which fought against the Portuguese army from 1961-1974, eventually succeeding in stripping the Portuguese of their power. The Angolan War of Independence was a success, and the individual parties moved forward to stake their claims. The MLPA, maintaining their communist PCA roots, declared the People's Republic of Angola on November 11, 1975. Meanwhile, the National Union for the Total Independence of Angola (UNITA), one of the other parties, declared Angola the Social Democratic Republic of Angola. A final group, the National Front for the Liberation of Angola (FNLA), asserting their rights to power, declared the country the Democratic Republic of Angola.

Civil War Breaks Out

This hotbed of communist, socialist, and democratic factions without an external enemy to fight primed the pump for the outbreak of civil war in the 1970s. This civil war raged for over 25 years, finally ended in 2002, when Jonas Savimbi, leader of UNITA, was killed by MLPA soldiers. Every one of these groups used the diamond industry as a weapon against their own people during the civil war years. This terrible period in Angola's history brought to light the terrible issue of blood diamonds and the violence these tiny beauties, so easy to transport and disguise, can wreak on humanity. Today, MLPA maintains governance over Angola.

The Endiama Group

Some time back, "the regime came under pressure from within as well as from the international environment, to become more democratic and less authoritarian" {24}. The MLPA's response to this pressure "was to operate a number of changes without substantially changing its character" {24}. By all appearances, Endiama represents the changes the government has made to please their international diamond partners. Endiama is a state-run organization that appears to be far more than a diamond mine. According to their website, the Group "exercises in seven distinct areas" {8}: Mining (prospecting, research, and exploration of diamonds), Trading and Marketing (of diamonds), Transport and Logistics (likely also for diamonds and those connected to the diamond trade), Healthcare (primarily for those working for the mine), Security ("to prevent illegal practices and smuggling of diamonds" {5}), and Social Responsibility. Endiama professes to practice and promote "compliance of environmental protection policies and sustainable exploitation of diamond reserves, promoting social investment growth, valuing Angolan professionals and regulating the diamond exploitation industry" {6}. They also invite their "partners to join social and cultural causes" {6}. Endiama further assures the industry that it cooperates fully with the Kimberley Process to ensure that the diamonds they sell are clean from violent practices. The Group has worked hard to comply with the UN's Kimberley Process to ensure that only clean Angolan diamonds reach the open market. Several sources indicate that Angolan diamonds are not only conflict free, but that their miners receive all the benefits the Group has to offer, including access to medical clinics and community enrichment programs in the mining cities.

A Great Wealth Divide

The services the Group offers appear to be a boon to the residents of Luanda. In a forum discussion on Lonely Planet from 2007, we find these words from a resident of the city: "The people are generally nice and most of the time the atmosphere is relaxed. Climate is nice, food is OK, the night life is lively, beaches are clean and safe and there are a few nice places around to visit" {14}. However, as of 2013 Angola remains "classified as 'not free' by Freedom House" {24}. Another participant in the same discussion on Lonely Planet had this to say: " downside of Angola is the great wealth divide, the horrendous traffic in Luanda, the slums and uncollected rubbish, poor service and frustrating infrastructure" {15}. Endiama has done some good, but it seems that most of what they have to offer benefits only those working for the Group. They have a long way to go to effect changes throughout their country. Let us hope that the same efforts Endiama has applied to cleaning up the diamond industry in Angola will soon be used to harness the annual revenue of $956 million for the improvement of life for those Angolan citizens not directly associated with the diamond industry.

Back to the Chloe Diamond

Turning back to the Chloe Diamond, most sources relate that the same year it was discovered, the glorious piece of rough was purchased directly from Endiama for an undisclosed sum by Ron Cohen, CEO of the LA-based diamond brokerage firm, Clean Diamonds, Inc. Mr. Cohen is a member of The Jewelers 24 Karat Club of Southern California. According to their website, the club "was formed to promote ethical business practices among jewelers." Clean Diamonds, Inc.'s website is restricted to non-registered users; however, their home page claims they deal only in GIA- and AGS-certified loose diamonds. Once he purchased the diamond, Mr. Cohen and his team spent two years carefully planning the diamond's cut. Their desire to carve the diamond to its maximum potential was attained. The result of their efforts was the stunning 84.37-carat, Brilliant Cut, D-color white diamond now known as the Chloe Diamond.

Mr. Marciano Wins the Duel

Mr. Cohen then "decided to consign it with Sotheby's for the amount of exposure that I was confident the auction house would be able to provide internationally" {3}. His somewhat risky decision paid off when a CNN news spot caught the attention of Guess? Jeans magnate, Georges Marciano, who said the stone completely captivated him {22}. After making a tour of the world, including stopovers in London, Paris, New York, LA, Hong Kong, Rome, Bahrain, and Dubai, the diamond came to rest on the auction block on November 14, 2007, in Geneva's historic Beau Rivage Hotel. Nearly 300 industry experts and jewelry collectors sat on the edge of their seats as two buyers fought over the magnificent stone. By phone from Beverly Hills, California, Mr. Marciano won the duel, securing the diamond for his growing collection of art and jewelry {13}. Soon after sealing the deal, Mr. Marciano named the stone after his then-12-year-old daughter, Chloe. The Chloe Diamond was entrusted to his care, ready for its new adventures as a very rare and important stone. When it was all over, David Bennett, chairman of Jewelry at Sotheby's Europe and Middle East division, declared, "The results achieved tonight for the Chloe diamond is one of the highlights of my career. It has been a privilege to work on the marketing and sale of this magnificent stone, which ranks among the most beautiful diamonds I have ever seen" {13}.

A Turn Toward Intrigue

From here, the Chloe's story takes an intriguing turn--you might even say it takes a turn toward intrigue. According to Tom Zoellner, author of The Heartless Stone: A Journey Through the World of Diamonds, Deceit, and Desire, “If you have a diamond that has any whiff of sex, violence, royalty or intrigue of any sort, its value will climb at least four-fold” {9}. If Mr. Zoellner is correct, Mr. Marciano can expect a significant return on his investment, although it might wind up funding his massive debts. If the media can be trusted, he certainly has added his own "whiff" of sex, violence, and intrigue, with a healthy dose of American celebroyalty to the Chloe Diamond.

A Whiff of (Celeb) Royalty

It all began simply enough. Georges Marciano grew up poor in France. He dropped out of school as a teenager to work in his country's garment district. In 1981, he and his three brothers hopped a ship and brought their ambitions to the US, where Georges's unique take on fashion "rocked the industry" with his "flamboyant artistic" acid-washed jeans {17}. By 1993, after raking in millions in the clothing industry, Mr. Marciano sold his share of Guess? and invested his $220 million share in real estate in Beverly Hills, California and Montreal, Canada. Mr. Marciano kept his family in high style. According to his ex-wife, Megan Marciano, they enjoyed "a standard of living that had no limits" {18}. In 2005, he sold one of his properties, the Bank of America building in Beverly Hills, for a staggering $135 million. In 2012, Mr. Marciano's three Beverly Hills homes were estimated to be worth over $43 million. The most elaborate of the estates features a "19,590-square-foot house on 2 acres with two two-bedroom guesthouses, a sunken tennis court, a swimming pool, lush gardens and a motorcourt where Marciano sometimes parked 11 Ferraris" {2}. And that is not all. He also owned his own personal Boeing 737 and an extensive "post-war American pop art collection" with works by Marc Chagall, Ed Ruscha, Frank Stella, Claes Oldenburg, Willem de Kooning, and more {11}. He also had homes in Utah and France and a cellar full of priceless wines {18}. Without a doubt, Georges Marciano stands secure among America's celebrity royalty.

A Whiff of Sex

Unfortunately, following a horrible divorce in 2004, after two years of vicious negotiations, Mr. Marciano's empire began crumbling. Rumors abound that he resorted to pharmaceutical drugs to numb his pain, to the tune of $3,000 per week. Rumors also circulate that in 2005, he employed his staff to interview between 50 and 60 au pair candidates. He did this despite the fact that his children, between the ages of 11 and 18, reportedly lived with his ex-wife {18}. According to writer Harriet Ryan, official statements made by his staff indicate that these women were flown to LA, "picked up from the airport in limousines, put up at five-star hotels, wined and dined at Spago, taken on shopping sprees and slipped $100 bills" {18}. Ms. Ryan reports that none of these women were hired. Many of the reports, both in the US and in Canada, report that Mr. Marciano's staff spent $1.4 million to fund these in-person interviews. His accountant, Gary Iskowitz, reportedly confided that Mr. Marciano "saw it as a dating service" {18}. Currently, according to a Canadian report, Mr. Marciano is married to Sascha Romer, who served as his family's au pair in 2003 {10}.

A Whiff of Violence & Intrigue

According to several employees, the bereft man began to demonstrate erratic and sometimes violent behavior. One can only surmise that if these reports are true that the drugs must have played a significant role in what transpired next. Reportedly, Mr. Marciano began to monitor the activities of his employees. He also began a thorough investigation of his accounts. In 2006, this thorough investigation led him to what he believed was a missing $1.4 million. Despite his bookkeepers written documentation that Mr. Marciano had actually authorized the sum for the au pair search, he was unable to overcome his overwhelming suspicions. On a crusade of his own making, he launched a legal claim against seven of his employees. The $1.4 million grew in his mind to an astronomical sum of $413 million in missing cash and goods {18}. A sheriff's report failed to establish evidence of his claim, as did the reports of his own hired accountants. Meanwhile, the press had a heyday painting a picture of a suspicious, delusional man in pursuit of his own brand of justice. As many as 17 law firms were retained by Mr. Marciano to pursue his cause, and as you can imagine these seven employees must have experienced some kind of hell during this long court battle. In the end, a final judgment was made in favor of the defendants. In a surprising turn of events, these seven people turned right around and filed their own countersuit for libel and intentional affliction of emotional distress. A judgment was made in favor of the plaintiffs on the order of $260 million. Mr. Marciano made a move to file for bankruptcy, but failed to provide the necessary documents to prove such a claim. After putting up with several evasive moves made by the multi-millionaire, the presiding judge ordered a bench warrant for his arrest, citing contempt of court. By this time, Mr. Marciano had transferred much of his wealth, including the Chloe Diamond, to his estate in Montreal, Canada {10}. He opened a luxury hotel in Old Montreal, where he displayed his vast art collection in the rooms, lobbies, and foyers of the exquisite establishment. The American courts made several attempts to seize and freeze Mr. Marciano's assets, including those in Montreal. This proved difficult due to Canadian laws of extradition. One such asset the courts pursued was the $16.1 million diamond Mr. Marciano purchased in 2007. According to statements made by Mr. Marciano, he gave the Chloe Diamond to his daughter in 2007 {1}. Insurance reports proved otherwise, and according to Forbes, a Bankruptcy Trustee was dispatched in 2011 to the diamond, along with stock certificates, legal documentations, and a collection of luxury watches {1}. According to La Presse, a Montreal judge ruled against this "illegal seizure" {21}, and the Chloe Diamond and Mr. Marciano's other property was returned to him the following December {10}. The plaintiffs continue to wait for their monies, and Mr. Marciano maintains a presence in Montreal, Canada, where his luxury hotel, LHotel thrills art collectors and enthusiasts for as much as $380 a night.

An Uncertain Future

Today, the Chloe Diamond faces an uncertain future. It's very possible the diamond will eventually be seized and sold, likely at auction, to pay Mr. Marciano's debts. However, for now he maintains possession. It is easy to surmise from this account that Mr. Marciano is a shady character. However, as is often the case, the media has presented only one side. According to his long-time friend and employee, Mr. Rod L. Harrell, Georges Marciano is "a true gentleman, great person...and a friend" {21}. A citizen of Montreal also writes that Mr. Marciano's "employees speak very highly of him," and that he "was named best hotelier by Expedia" {21}. I suppose only time will tell whether this was just a glitch, a bad chapter brought on by severe emotional distress. Perhaps in the end, Mr. Marciano's story will prove a long and glorious rags-to-riches life story, with the Chloe Diamond playing a powerful part.