Florida Jeweler’s Diamonds Frequently Disappear

By MICHAEL LAFORGIA | August 8, 2012

Worth Avenue’s unluckiest jeweler.

At Le Salon, Kaufmann’s spacious and well-lit gallery of eye-popping diamonds, sapphires and other precious stones, six-figure transactions are not uncommon. Millions of dollars in rings, necklaces and bracelets glitter in a dozen polished showcases. The walls are eggshell, the carpets a soft pink, the accents in white marble. The staff is cool and professional, ready with a hot cup of coffee or a flute of cold sparkling wine.

Kaufmann is charming and approachable. On the sales floor he smiles, leans forward. His silk tie is slightly askew, his thinning gray hair swept back like a symphony conductor’s. Nothing here hints at misfortune.

But, for more than a year, Le Salon has been the setting for a Palm Beach mystery.

Diamonds disappear from Kaufmann’s shop, often with little or no explanation. In 15 months, 11 stones have vanished, according to town police reports, a loss valued by Kaufmann, for insurance purposes, at more than $125,000.

Ask him about it, and the usually sunny jeweler will frown. “You need to understand that a story like this is not something that I would want published, if possible, because it gives the wrong impression to people,” he’ll say, in a soft accent that belies his Swiss ancestry.

“These things happen from time to time. Mysterious disappearance happens to every jewelry store. Sometimes things get lost. It’s just amazing.”

Kaufmann lost his first big stone during a time of intense family conflict.

The date was Feb. 5, 2008. Months earlier, Kaufmann had announced to his father, E. Pius Kaufmann, founder of Kaufmann de Suisse jewelers and the man who had taught Kaufmann his trade, that he was striking out on his own.

And not only that. During a family meeting, Christopher Kaufmann told his father and siblings that he would open a store just down the street from Kaufmann de Suisse. He aimed to compete directly with the family business.

“It was, in a way, I would say the saddest experience in my life,” said E. Pius Kaufmann, now 83, in May, recalling the schism. “I lost a son.”

Soon after Kaufmann announced the split, his family learned that alarming things had taken place during his time running the Palm Beach business, they claimed in lawsuits filed in February and August 2010.

First, they claimed, were overpayments to Kaufmann. Managing Kaufmann de Suisse entitled the jeweler to an annual salary of $550,000, according to his employment contract. Even so, during four years running the shop, between 2004 and 2007, he paid himself $2.9 million more than he was allowed to earn, his family alleged. They also claimed he borrowed more than $1.5 million from the family business in unauthorized loans.

Next, they claimed, were the family shop’s finances. Kaufmann, his family alleged, intentionally ran the business into the ground, diverting money and jewelry to his new shop and withholding debt payments until Kaufmann de Suisse, his father’s life’s work, was teetering on the brink of collapse.

Then, after Kaufmann’s family sued him, Kaufmann offered to pay off the shop’s debts if his father agreed to drop the case, his family claimed in a second lawsuit filed months later. After he made that offer, and pressured his parents to accept it, Kaufmann’s father signed a statement releasing Kaufmann from the family’s claims against him, according to the second lawsuit. (That case still is pending.)

All of this was swirling in the background in February 2008, when Kaufmann, who apparently was back and forth between his family’s shop and his new business, Le Salon, called police and reported that something extraordinary had happened.

He said that on Jan. 18 – eight days before he was to quit working at Kaufmann de Suisse – he accidentally might have thrown away a 12.8-carat emerald at his father’s shop. The stone was worth $87,040.

He told police he didn’t discover the mistake until 18 days later. He said he went back and watched the shop’s security footage. He said he watched himself on the tapes as he handled four stones at his desk.

“According to Kaufmann, he picks up items from the desk, throws something in the trash basket located underneath the desk and walks to the back room of the store where he then gives three stones” to an employee, Palm Beach police officer Michele Pagan wrote in her report. “Kaufmann stated neither one of them immediately realized the stone was missing.”

There’s no record of the stone having been recovered. Pagan classified the incident as “lost property” and noted that her report was filed for insurance purposes only.

Longtime jewelers, industry representatives and insurance experts agree: Shops don’t often lose large, valuable pieces.

Adam Graham, spokesman for the Dallas-based American Gem Trade Association, put it this way: “You might find there’s a wives’ tale out there, maybe somebody dropped it down a garbage disposal, but it’s not something that there’s any substantiation to. And if it happens, it’s a once in a lifetime thing.”

That hasn’t been the case at Kaufmann’s Le Salon.

The jeweler lost his next stones, two round-cut diamonds totaling 4.07 carats, in September 2010. He told police officer William Rothrock that the $18,700 jewels simply went missing. “Kaufmann doesn’t know if they were misplaced, lost or stolen,” the officer noted in his report. “Kaufmann intends on filing a claim with his insurance carrier, Wexler Insurance, and advised that he needed a police report for that purpose.”

Nearly six months passed before misfortune struck again. On Feb. 21, 2011, Kaufmann told officer James D. Miller he lost a platinum band ring set with diamonds weighing 4 carats. He said he had slipped the ring into his right front pants pocket and walked to his car that morning. About half an hour later, he reached into this pocket and the ring was gone. Its value: $30,000.

Four months later, on July 6, 2011: four diamonds – two round brilliant earrings totaling 4.26 carats and two loose stones weighing 1.52 and 1.51 carats, respectively – vanished from the shop. The total loss was $45,470. “Kaufmann said that he is not sure how the stones or studs were lost, but does not suspect that they were stolen,” an officer – Miller again – wrote in a report.

Four months after that, on Nov. 9, 2011: Another pair of diamond earrings went missing. The stones combined weighed 4.35 carats. Their value: $18,705. Officer Miller handled that report, too.

And then, less than two months later, there came another disturbing discovery. On Dec. 28, Kaufmann called police to report a theft. He said that on Christmas Eve, an employee had opened a yellow customer envelope expecting to see a client’s 5.58-carat oval diamond, and found instead an identical cubic zirconium.

Everyone was a suspect, Kaufmann said, according to a report by officer Pagan. He said he wanted the culprit caught and prosecuted. Eventually, police interviewed him and his employees using a computerized voice stress analysis, a test meant to detect signs of deception in speech. The results of each interview were inconclusive.

Soon after that experience, Kaufmann changed his mind. “Mr. Kaufmann advised me that he is no longer interested in prosecution,” a Palm Beach police detective wrote in a report. Kaufmann signed a form. The investigation was closed.

In all, Le Salon ended 2011 having suffered alarming losses by industry standards. In a span of 15 months, 11 diamonds – weighing a combined 25.29 carats – had disappeared from the shop, at a total estimated loss of $127,875.

When a reporter asked Kaufmann about the oval diamond that went missing on Christmas Eve, the jeweler seemed uncertain about whether the stone was lost or stolen.

First, Kaufmann said, “Basically, it’s nothing so amazing. He (a customer) brought his diamond in here to be reset, and what happened was, you see, it was basically misplaced. And then we replaced it with a diamond of higher quality. Much higher quality.”

Later, during the same conversation, Kaufmann said: “Basically, it was stolen, to tell you the truth.

“Jewelry theft happens everywhere. There’s nothing that can be done with it. It was fully insured. And we were able to make the claim.”

Still later, he said: “I think it was a mysterious disappearance. Maybe it got lost. I don’t know. We definitely made an insurance claim on it, though.”

In subsequent interviews, Kaufmann continued to express uncertainty over whether the ring was lost or stolen, but he emphasized that the stone’s quality was “lousy.”

In an interview in May, Kaufmann told The Post that his customers are deeply satisfied with his service. As a sign of his success, he noted that he runs another shop, also called Le Salon, in East Hampton, N.Y.; that he recently opened yet another shop in South Hampton; and that he plans to open a fourth store in the shops at Bal Harbour near Miami.

“We sell more diamonds, important diamonds, than anybody on this street,” he said. “I would think we sell 20 percent of the diamonds sold on this street.”

Despite this success, Kaufmann has had problems meeting some obligations, records show. Although he and his wife bought a stately house on Palm Beach’s Seaspray Avenue in 2000, and then steadily bought up surrounding lots to expand it, by 2010 he wasn’t paying some bills.

That June, the IRS filed a lien against him in Palm Beach County, seeking $365,994 in unpaid taxes. A year later, Kaufmann paid off the amount in full, records show.

In March 2011, Batten Construction Inc., a company Kaufmann had hired to repair a sunken floor at his home, filed a lien against the jeweler, claiming he still owed $47,440 for $112,440 worth of work.

On Dec. 14, the Florida Department of Revenue filed a collection warrant seeking $1,154 in unpaid sales and use taxes from Kaufmann. He paid the state off two weeks later.

He paid off Batten, the contractor, by Jan. 25.

Later, he would decline to discuss the allegations in his family’s lawsuit against him or specifics of the shop’s missing diamonds, other than to describe the vanished stones as “an internal thing.”

“These are insignificant losses,” he said. “Our business is a $25 million-a-year business. It’s insignificant.”

“All these losses that we had, they were all my stones except for one, and the person that lost their stone, I have replaced it with a better stone for them, and they’re entirely satisfied,” Kaufmann said. “Nothing was fraudulent.”

He added that the store has put in “an entirely different system” to prevent more stones from disappearing. He declined to describe the new system.

As for the liens, he said they’re nothing unusual for a small business owner to encounter in a hard economy. “Every person who has dealt with me, including the IRS, including the Department of Revenue, has always been happy in the end,” he said.

But in the May interview, he reflected on the shop, and on its place among Worth Avenue’s nearly 30 jewelers. “It’s very hard to survive on this street. You have to be very determined,” Kaufmann said, sitting at a jeweler’s desk between his showcases.

One key to his success, he said, is the store’s handsome double display windows. By far they’re the largest on Worth Avenue, he said. “It’s pretty impressive, don’t you think? They see it and they go, ‘Wow. They’ve got some goods, huh?”‘

Another key: the ads he places in “Town and Country” and other niche publications. He said people from as far away as Europe call and order his custom, stylized pieces sight unseen. “And some pretty valuable pieces, too.”

“We do so much business with people ordering us, we have a full-time shipper in the store,” he said. “It’s always like that. Confidence among the customers is so important. It’s incredibly important that people perceive us to be trustworthy.”

Not long after, he was interrupted by one of his jewelry makers, who emerged from the back of the shop bearing an enormous diamond ring, a work in progress. Look at this, Kaufmann said, taking the piece, a 17.5-carat square shaped diamond – what’s known as an emerald cut – cradled in an elaborate platinum setting. This, he said, is for a very special customer in Scottsdale, Ariz.

“That emerald-cut? That’s like $700,000,” Kaufmann said. He turned the unfinished ring so that the diamond facets flashed and showed their fire. “Can you imagine the confidence that you have to have for something like that?”

As he was talking, the big stone slipped free of the platinum prongs, and $700,000 thudded dully against the velvet of the jeweler’s desk.

Kaufmann kept casual. Slowly, he slid his palm over the desktop, scooping up the diamond, and, in no special hurry, sent it back to the rear of the shop.

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