Former Jeweler Faces Federal Money Laundering Charges For Pawning Diamonds Falsely Reported Stolen In 2004
BIRMINGHAM -- Federal prosecutors today charged a Vestavia Hills man with money laundering for pawning a 3-carat diamond in 2013 that was among a cache of jewels he collected $2.6 million in insurance money on in 2004 after reporting them stolen in a Mountain Brook Jewelry store robbery.
U.S. Attorney Joyce White Vance, FBI Special Agent in Charge Richard D. Schwein Jr., U.S. Secret Service Special Agent in Charge Craig Caldwell, Vestavia Hills Police Chief Dan Rary and Mountain Brook Police Chief Ted Cook announced the charges against JOSEPH HAROLD GANDY.
The U.S. Attorney's Office charged Gandy, 64, with one count of money laundering for pawning property worth more than $10,000 that he obtained through a criminal act, wire fraud, which he committed when he submitted an insurance claim on diamonds that had not been stolen. Prosecutors also charged Gandy with one count of being a convicted felon in possession of firearms for the 99 weapons seized at his Vestavia Hills home in November 2013. Gandy is prohibited from possessing weapons because of a 1989 federal mail fraud conviction.
The FBI recovered jewelry during the search of Gandy's home and, as part of a plea agreement with the government, he also turned over a portion of the approximate $1.5 million worth of diamonds and jewelry he falsely reported stolen in 2004. Among those jewels is a rare Blue Diamond worth at least $620,000.
"This defendant revealed decade-old criminal acts, and committed a new crime when he brought forth valuable, but fraudulently obtained diamonds to pawn," Vance said. "Thanks to the committed and cooperative efforts of the Mountain Brook and Vestavia Hills police departments, the FBI and the Secret Service, Mr. Gandy avoided, but did not escape justice."
"This case illustrates the great cooperation among law enforcement at all levels," Schwein said. "I want to extend my personal appreciation to the Vestavia Hills and Mountain Brook police departments, the U.S. Secret Service, and my agents for their outstanding work. It was their diligent investigative efforts that brought this case to where it is today," he said.
"I commend the cooperative between the FBI and our investigators," Rary said. "Interagency cooperation is essential in today's environment, especially in complex investigations such as these."
Prosecutors filed the charges and the plea agreement with Gandy in U.S. District Court.
According to the plea agreement, Gandy's crime unfolded as follows:
Gandy was an owner and the operator of Denman-Crosby Jewelry Store in Mountain Brook in 2004. In December of that year, he reported that two unidentified men robbed the store at gunpoint. At the time, Denman-Crosby was promoting a loose diamond sale for Christmas. It had many diamonds and other jewelry in on consignment from jewelers in New York and elsewhere. The store carried a $2.6 million insurance policy. Gandy had increased the coverage amount with XL Specialty Insurance Company a few weeks before the robbery.
In January and March of 2005, Gandy used interstate wire transmissions to submit insurance claims from the robbery. He included a detailed inventory of jewelry worth about $2.8 million that he reported stolen. XL Specialty paid the policy's limit of $2.6 million.
In July 2013, Gandy began sending a friend to jewelry stores in Jefferson County to pawn diamonds he had reported stolen in 2004. The first effort ended when the jeweler requested documentation on a 1.59-carat diamond, mounted in a platinum setting, and attempted to examine the stone closely. The concern was that the diamond might bear a laser inscription useful in tracing its history. Subsequently, Gandy examined 10 to 12 diamonds under a microscope and selected stones that bore no inscription.
On July 26, 2013, Gandy sent his friend to a Birmingham jewelry store to pawn a 3.01-carat emerald-cut diamond he said was worth about $43,000. Gandy said he wanted at least $15,000 for the stone. The store accepted the diamond in exchange for a $12,000 loan. The diamond was one Gandy reported stolen in the Denman-Crosby robbery. He gave his friend $2,000 for making the transaction.
Between August and November of 2013, Gandy's friend pawned two more diamonds: a 3.45-carat cushion-cut diamond for $8,000; and a 2.16-carat round diamond for $2,000. Both stones were on the stolen inventory list Gandy provided the insurance company in 2005. Gandy gave his friend $1,880 after receiving the $8,000 for the 3.45-carat diamond.
Gandy's plea agreement is a "binding plea agreement" in which the government and Gandy stipulate that a 45-month prison sentence is appropriate. If the court rejects the plea agreement, either party may declare it null and void.
As part of the agreement, the government would recommend Gandy be required to pay $20,000 in restitution to the jewelers where he pawned the diamonds, and that he forfeit to the U.S. government all the jewels seized and recovered in the case. Vestavia Hills Police seized the 99 weapons at Gandy's house and has state charges pending against him. The city police are handling forfeiture of the firearms.
The government acknowledges in the plea agreement that it has no evidence or information to suggest Gandy is violent or has been engaged in previous violent behavior. The agreement notes that Gandy, through his lawyer, related that, except for older firearms he bought before his 1989 conviction or that were passed down from his father and grandfather, the firearms at his house belonged to his son who died in 2004.
The FBI, Secret Service, Vestavia Hills and Mountain Brook police departments investigated the case. Assistant U.S. Attorney George A. Martin Jr. is prosecuting the case