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Friday, January 08, 2010

Macy's In The Sky With Diamonds: Giant Cincinnati-Based Retailer Hit With Fake Gem Claims

CINCINNATI (TDB) -- The corporate headquarters of the chic national department store chain (NYSE:M) are (surprise!!!) located in downtown Cincinnati. But there's not been much in the local news outlets about two California class action lawsuits that contend Macy's has been passing off fake and inferior gems at its jewelry counters. The suits say rubies weren't pure rubies, a diamond setting is reputed to have been a cubic zirconium, quartz was heated and sold as green amethyst. So far, all the stories have come from Courthouse, which is an online newswire for lawyers. The blackout by the Cincinnati media looks like home cooking for a big corporation. Or it simply may be due to laziness, or lack of interest. Or it could boil down to not being aware of what is happening. Or it could be fear of offending a major advertiser. After all, Macy's is a $25 billion a year business, with about 800 stores and 167,000 employees.

The allegations against Macy's have not been proven true. But they are newsworthy -- the media reports allegations all the time. Just this morning, the Cincinnati Enquirer reported that a local couple was suing Graco Children's Products Inc. and Newell Rubbermaid Inc. over alleged defects in an infant car seat. That suit is seeking $100,000 damages. The companies named in the litigation are not in Cincinnati.

In the Macy's action, plaintiff Cortney O. Balzan identifies himself as a Master Gemologist Appraiser, and said he was a quality control contractor for the department store chain's West Coast operations. Balzan was based in San Francisco. He contends that during 2008 and 2009 the gemstones he saw were increasing flawed:

"Plaintiff discovered the following, among other things:
Gems that were represented to be natural 'rubies' were in fact heavily glass filled and ofter heavily lead glass treated. This created a disclosure problem . . .
Stones were being passed as untreated "green amethyst' when in fact this stone is in reality Praseolite (a heated form of quartz) while only purple amethyst is in fact real amethyst, natural and therefore of a much higher value;
Sapphires that arrived in plaintiff's lab were also fracture filled with glass;
Black sapphires were being passed off as black diamonds in the diamond jewelry department . . .
Many diamonds were enhanced by laser drilling or filling of surface cavities and fractures with a hardened substance;
Diamonds were irradiated or heated to induce color and then represented to be natural black diamonds."

Balzan contends Macy's "intended to enlarge its profits and reduce its costs by putting out into the public inferior quality gems while at the same time representing to the public that these stones and gems had passed independent Quality Control."

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