Spitzer Announces Statewide Investigation Found That Distributors, Retailers Sold Fraudulent Gold Jewelry

Attorney General Spitzer announced today that two large distributors in New York City and 18 retailers from across the state have been fined for selling jewelry products that were falsely portrayed as "10 karat gold." In fact, the jewelry contained insufficient amounts of the precious metal. Jewelry that is less than 10k gold cannot be represented as gold because it does not have gold's ability to resist tarnish and corrosion.

"Gold should mean gold," said Spitzer. "In fact, what these distributors and retailers were selling was nothing more than fool's gold. This case should send a message to all distributors and retailers across the state: if you are misleading the public and selling an inferior product, you will pay the price."

Acting on a tip from a trade industry association, Spitzer's office launched a year-long statewide investigation. Testing of the products showed that many of the items -- mainly small charms, earrings, and rings, many of which were figures of cartoon characters and other pop symbols -- failed to meet a federal standard that requires products advertised as gold to contain at least ten karats of the precious metal.

The investigation centered on two Manhattan-based distributors - Alishaev Brothers, Inc. and J&I Jewelry, Inc. - which imported and distributed "10 karat gold" products that actually contained insufficient quantities of gold. The products violated a federal law for gold content, as well as a state law requiring that gold content be accurately represented.

Alishaev and J&I Jewelry distributed these "underkarated" items mainly to the operators of small shops and retail vendors. Consumers were often low-income individuals and young people.

"Without expert training or testing equipment, there is no way for consumers to know whether gold jewelry is real or not," said Spitzer. "To allow the sale of underkarated jewelry is not only unfair to the public, but also to those reputable merchants who are selling gold that meets legal standards."

In settling the cases, Alishaev and J&I Jewelry have agreed to halt shipments of "underkarated" products and pay $50,000 and $25,000 respectively in civil penalties and costs to the Attorney General's office. The 18 retailers separately entered into settlements that require them to stop selling underkarated jewelry and/or representing that the items are gold and pay fines collectively totaling nearly $50,000. (A list of the retailers and fines is attached.)

Spitzer's office began its investigation after a tip from the Jewelers Vigilance Committee (JVC), a national industry trade association based in New York City. JVC Executive Director Cecilia Gardner said, "As part of the jewelry industry, our job is to keep an eye out for those who are tarnishing the trust the public places in jewelers. This was one such case. It's big profit for the distributor at the expense of thousands of individual consumers."

Spitzer's office provided jewelry buying tips for consumers. (See attached.)

The cases were handled by Assistant Attorneys General Dennis Rosen of the Buffalo Regional Office, Darren Longo of the Rochester Regional Office, Judith C. Malkin of the Syracuse Regional Office, Roberto G. Lebron of the Harlem Regional Office, and Melissa Saren, Herbert Israel and Leslie B. Neustadt of the Consumer Frauds and Protection Bureau.

Individuals with questions about the enforcement effort are encouraged to contact the Attorney General's consumer help line at (800) 771-7755 or at www.ag.ny.gov. The Jewelers Vigilance Committee can be reached at (212) 997-2002 or at www.jvclegal.org.

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