In a cross-border case of diamond investment fraud, Canadian citizen James Gagliardini has been sentenced to 56 months in U.S. federal prison for orchestrating a $21 million scheme through his company, Paragon International Wealth Management Inc.
From 2013 until its shutdown in 2018, Paragon misled around 200 investors, many elderly, into spending significant sums on pink diamonds that were promoted as high-value investments. Telemarketing tactics were used to gain trust, but many investors received neither promised returns nor diamonds.
Paragon International: Inside the Diamond Investment Scheme
Founded in Toronto, Paragon International promoted itself as a diamond investment firm focused on colored stones. Under Gagliardini’s leadership, sales representatives at the company’s call center targeted U.S. and Canadian investors, promoting pink diamonds as high-value assets. Initial investments were sometimes accompanied by real diamonds and certificates to gain investor confidence. However, Paragon repeatedly requested additional investments, citing delays and further funds needed for returns.
Court Proceedings and Victim Impact Statements
Gagliardini pleaded guilty to conspiracy to commit wire fraud, accepting a plea agreement that reduced his potential sentence. During sentencing, Assistant U.S. Attorney James Lewis described the financial toll on victims, many elderly and financially vulnerable. Victim statements in court highlighted the long-term impacts, with some forced to sell assets or delay retirement to manage resulting debt.
One victim stated, “I charged a large amount of money on my credit card to purchase the diamonds… I never received any diamonds, just excuses. I had to sell my company to pay off the debt.” Another victim, aged 79, shared that they continue to work to offset losses.
Documented losses to Paragon’s victims totaled over $15 million, with some estimates reaching $21 million.
Industry Implications and Lessons for Jewelers
This case highlights the risks associated with gemstone investments and the need for transparency and ethical standards in the diamond industry. Jewelers should be aware that schemes like Paragon’s can undermine public trust in diamond investments. Ensuring clear authentication practices and honest communication with customers can help reinforce the credibility of reputable jewelers in a market where investors may be wary of fraud.
