GIA Lab Gets Independent Review; Yonelunas Resigns

October 18, 2005

GIA Lab Gets Independent Review; Yonelunas Resigns

After hiring an outside law firm to conduct a four-month review of the GIA Laboratory, the board of governors of the Gemological Institute of America Inc., instituted several changes, it said in a press release. Thomas C. Yonelunas, former head of the GIA Laboratory, while not implicated in any violations of GIA's Professional Ethics and Conduct Compliance Statement, has tendered his resignation effective Dec. 31, 2005. Thomas M. Moses, G.G., is the new head of the GIA Lab, with the title of senior vice president, GIA Laboratory and Research.

The review was initiated in the wake of a lawsuit filed in the spring of 2005 by Max Pincione, which named GIA as one of four defendants. GIA says it is continuing to defend itself vigorously in that litigation. "The board was deeply disturbed by the claims asserted in the complaint, and we felt that we had a responsibility to ourselves, our clients, and the public to not only look into them but to also thoroughly examine all lab practices. That is precisely what we have done," said Ralph Destino, chairman of the board of governors.

The special committee appointed by the board to investigate the allegations in the lawsuit, and any related business practices, engaged the law firm of DLA Piper Rudnick Gray Cary US LLP to conduct the review. Thomas F. O'Neil III, a partner based in Washington, DC, led the review. O'Neil chairs the firm's government affairs practice group and served as an assistant United States Attorney for the District of Maryland. "Tom O'Neil has an outstanding reputation as a thorough and tough investigator. We knew we were in good hands," said Destino.

"We conducted an extensive four-month review, during which we interviewed dozens of witnesses and reviewed tens of thousands of documents, including thousands of diamond grading reports. From the outset, the board embraced the important guiding principles of self-policing and zero tolerance of misconduct," O'Neil said.

"The investigation revealed that, although GIA had undertaken to fortify various facets of the grading process during the past decade, additional measures are warranted," said O'Neil. "Accordingly, we have presented for the boardıs consideration a number of possible enhancements of, and supplements to, existing policies governing the grading process and compliance in general."

In addition to changes to lab leadership, GIA also terminated four employees at its New York City lab. The board also will appoint a compliance officer in the laboratory, who will report to the general counsel and will oversee the enforcement of GIA's compliance policies. "We have zero tolerance for any misconduct by employees of the laboratory," said Destino. "They undermine confidence in GIA's ability to serve the diamond industry and ensure the public's trust in gems and jewelry. Going forward, all GIA employees will be obligated to report all suspected violations of GIA's compliance policies to the new compliance officer.

"At the same time," added Destino, "our policies apply with equal force to lab clients. We, therefore, will not tolerate any violations of our code of ethics by clients of the lab, most particularly improper attempts to influence the outcome of our grading reports. We have identified a small community of lab clients who are implicated in such actions and, rest assured, they will be dealt with swiftly and decisively."

"I want to thank the board of governors for their strong leadership in this sensitive matter. Because of GIA's important position in the industry and in the public eye as the leading authority in gemology, we take very seriously the need for our practices, procedures, and employees to be beyond reproach," said William E. Boyajian, GIA president.

"That is why we are so pleased with the appointment of Tom Moses to oversee the laboratory. Tom Moses is a man of unquestioned integrity and professionalism, as he has demonstrated over his 23 years of outstanding service to the Institute. His leadership will be essential in bringing a serious, systematic approach to our efforts to strengthen our organization even further. At the same time, I want to thank Tom Yonelunas for his many years of service to GIA and the entire industry," said Boyajian.

by Peggy Jo Donahue

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