Border guard

by Don Whitehead

Soon after his arrival, he had called a business acquaintance in the Antwerp diamond trade and asked him to dinner at his hotel. He had met the Belgian in New York City and the Belgian had insisted that they should get together on his first trip to Antwerp. The friend had arrived at the hotel and they had enjoyed an excellent dinner that evening. Over a brandy, they had discussed business. Mr. X had confided that the next day he intended to purchase $200,000 worth of diamonds in the market. And then he had complained of the customs duties and the taxes that he would have to pay on the profits.

After several more brandies, his friend had said to him: “Listen to me. It is silly for you to pay such taxes when it is unnecessary. Let me tell you how you can avoid the taxes. Tomorrow, go to any of the regular diamond houses, any that you prefer, and make discreet purchases. After you have selected the stones, go to the coffeehouse on the corner of (and he named the street). Order a cup of coffee and then tell the waiter that you wish to speak to the manager. When the manager comes to your table, ask him to have a cup of coffee with you. Tell him that you have purchased some merchandise and you wish to contact someone who will deliver the merchandise to you in New York City. The manager, quite naturally, will say he knows nothing of such affairs, but in a short time you will be approached by a stranger. This man will say he understands you wish the delivery of certain merchandise to the United States. He will ask you, ‘How do you wish to pay for this?’ And you say, ‘By cash.’”

Mr. X had interrupted to say, “Can you give me the name of this man who will approach me?”

His friend had shaken his head. “No. You will never know his name—and you will never know the names of anyone with whom you deal. You must trust these men because they are reliable. They have to be reliable to stay in business.”

“Now,” he had continued, “the man who approaches you will take you to an appraiser’s office somewhere in the city. You carry your diamonds with you to be appraised. When the value of the stones is confirmed, you will be asked for a cash payment of six or seven per cent of the stones’ value as insurance which guarantees their safe delivery to you in New York. The insurance rate varies from six to ten per cent depending on circumstances. I think it now is about six or seven. After you pay the fee, you leave the diamonds with the gentlemen. They will tell you when to expect delivery.”

Mr. X remembered his amazement. He had exclaimed, “Do they give me a receipt for the diamonds? Do I just walk out the door with nothing—not even knowing the names of the men I’m dealing with?”

His friend had said, “You get nothing. Believe me, this is the way the syndicates operate. It is done every week. You understand they cannot have a record of these transactions.”

Then his friend had explained the syndicates. In Antwerp there were many wealthy businessmen who could not break into the tightly controlled, legitimate diamond business, which was in the hands of five old-line diamond clubs. Closed out of this market, they had turned to the only diamond business open to them—the insuring of diamonds smuggled into the United States and other countries. They had formed loose syndicates and had organized rings of men and women to act as carriers.

Members of these shadowy syndicates frequented certain coffeehouses in and near the diamond market. When advised that someone had prepared a shipment of diamonds, and wished insurance, the group would meet to prorate the risk. One man would take $20,000, another $30,000, and so on, until the full value of the diamonds was covered. They would agree to pay the appraised value of the stones if the stones were lost, stolen, or seized by Customs officers.

Mr. X had lain awake for hours after the conversation with his friend, trying to decide whether he should make such a gamble. He had decided finally that the risk was worth it. The next day he had gone to the diamond market, purchased the stones, and then gone to the coffeehouse as his friend had suggested. He had talked to the manager. The stranger had approached him. He had been taken to an office in a part of the city which he could never find again. His gems had been appraised. He had paid the insurance fee—seven per cent of the appraised value—and had walked out of the office with nothing to show for any of the transaction.