If you fancy losing a lot of money in a short space of time, then I’d suggest giving your savings to cold callers flogging diamonds.

A rash of companies selling fancy coloured diamonds have collapsed over the past couple of years, leaving investors with little or sometimes nothing.

The latest is The London Diamond Shop, which has gone into liquidation owing £308,000.

Online this lot boasted of “numerous happy customers,” saying: “Each one walked away with an amazing deal”.

Among its victims there’s an 86-year-old I’ll just identify as David.

He was first contacted by The London Diamond Shop by junkmail, the letter gushing about diamonds being a “great investment” because you could avoid paying Capital Gains Tax - which is rubbish.

David was later phoned, and the sales rep used a tactic typical of anyone flogging a dodgy investment – claiming the banks could not be trusted with your savings.

“The man said that traditional banking was now in an ever precarious position and diamond investment was a much safer bet,” David recalls.

After buying two diamonds through a London Diamond Shop sales rep called George, David was passed on to someone using the name Walter Edmonds, a “broker consultant”.

David describes Edmonds as “extremely pushy” and says he “harped on about the state of banking”, while asssuring David that his diamond investments were in safe hands.

In total David bought six diamonds from the company, paying from £4,000 to £18,000.

He tried to cash in his investment after his boiler had packed in and he needed to pay for a replacement.

London Diamond Shop Ltd

Edmonds claimed that he’d found a buyer in the United Arab Emirates willing to pay £82,000.

But before a sale could go ahead, David was told that he must pay a £3,000 fee to comply with money laundering regulations and £1,200 to cover secure delivery.

“I stupidly agreed,” he concedes.

He says that the company promised a cheque before Christmas, but nothing arrived.

“I’ve sent letters by recorded post requesting the money, but have had no response,” he says.

In total David paid around £62,000, including fees, but has no idea how much the diamonds are really worth.

“I am in possession of the diamonds, but given the financial difficulties I’m facing, I cannot afford to have them valued,” he explained.

“My investments have left me unable to make vital repairs to my home, I’ve still not been able to fix my boiler.”

The sole director of The London Diamond Shop is 27-year-old Darren Johnson of Orpington, Kent.

I caught up with him as he left the creditors meeting at the offices of accountants Griffins in Sidcup, south London, but he refused to comment – in fact, he denied being Darren Johnson.

Diamond investments are not regulated by the Financial Conduct Authority, which means that victims of rogue sellers have no recourse to the Financial Services Compensation Scheme.

The FCA warned last year: "More than a quarter of over 55s falling victim to investment fraud are scammed via an unauthorised firm selling unregulated products, such as wine, diamonds and land."

The London Diamond shop is just the latest in a sad litany of diamond investment disasters. Here are some of the others.

Dan Edgar of TOWIE (
Image:
Rex Features)

Reco Commodities LLP

Dan Edgar from The Only Way is Essex has been barred from running companies for 14 years after his Reco Commodities LLP was branded “a fraudulent investment vehicle” by the Insolvency Service.

It used high pressure sales tactics and lies about its expertise to con members of the public into investing around £420,000 in diamonds.

Victims were told that could make a 500% return in eight years but some investors did not even get their hugely over-priced gems, yet alone any profit.

Henderson & Forbes

Henderson & Forbes Limited marked up the diamonds it sold to the public by sometimes more than 1,000%.

Investors lost £1.5million when the company was liquidated.

The sole director was 24-year-old Joseph Jordan from Woodford Green, East London, who has been banned from running companies for 14 years.

Cohen Stones website

Cohen Stones Ltd, Imperial Assets Solutions Ltd, Tudor Global Ltd

This trio made £3.5m from the diamond investment racket, flogging diamonds to unwitting customers at twenty times the purchase price.

In 2015 three London directors behind the scam were banned from running companies - Charles Sewell and Edward Philips for 14 years each and Liam O’Keeffe for 13 years.

Ken Beasley of the Insolvency Service’s Public Interest Unit said the victims of the companies were often elderly and vulnerable.

“O’Keefe, Philips and Sewell were responsible for investors being deliberately misled about the value of the diamonds and in doing so they have caused significant financial losses to individuals,” he said.

Solitaire Alternatives Limited

This disaster raked in £750,000 in just over a year by using cold callers to sell coloured diamonds as supposed investments.

“It has just taken the investors’ money for nothing at all in return,” said Official Receiver Tony Hannon.

Director 30-year-old Gary Arnold, from East London, has been banned from running companies for 12 years.

Diamonds sold to investors by Russell Hart Limited were worth as little as 11% of the purchase price.

Victims of this sham lost £832,000 and in April last year the 26-year-old director, Thomas Harrison from south London, was barred from running companies for the maximum 15 years.

James Gilkes

Coloured Diamond Exchange

This was the trading name of CDX Worldwide Limited, which claimed to be based at a prestigious address near the Bank of England in the City of London, but this was all part of a charade that helped con £1.2million from investors.

Its over-priced diamonds were marked up by as much as 550%.

Last month the sole director 35-year-old James Gilkes from Luton, Beds, was banned from being a director for 12 years.

Russell Hart Limited

Diamonds sold to investors by Russell Hart Limited were worth as little as 11% of the purchase price.

Victims of this sham lost £832,000 and in April last year the 26-year-old director, Thomas Harrison from south London, was barred from running companies for the maximum 15 years.