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Unique Gems International
More than 11,000 victims, mostly in South Florida, invested and lost millions in one of South Florida's largest pyramid schemes.
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Unique Gems International, fleeced tens of millions of dollars from South Floridians, it was a work-at-home scheme that used the famed astrologer Walter Mercado as a pitchman. It promised big rewards to those willing to plunk down thousands for kits to assemble beaded necklaces that the company claimed had supernatural powers to cure diseases and strengthen sex drives.

Founded in 1995, Unique Gems promoted its get-rich-quick schemes at lavish parties and milked a photo of company officials with President Clinton -- a picture taken after the firm had made an $85,000 campaign contribution that was later returned.
It was shut down by state authorities who dubbed it a classic Ponzi scheme in which earlier investors were paid off by later ones.
  • Ponzi Schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.
Unique Gems and its president, Enrique Pirela, promised to pay consumers $60 for each necklace they assembled at home. To start, consumers paid a $3,000 deposit and received materials for 30 necklaces. In exchange for the assembled necklaces, the company was supposed to give the consumers their $3,000 back plus $1,800. In addition, Unique Gems promised assemblers commissions if they recruited others who in turn deposited more than $5,000 as a group in one month.

"Despite company claims that they would sell completed necklaces through various merchants, few if any such sales have been made," Florida Attorney General Bob Butterworth said. "The operation is being run strictly on consumer deposits. That makes it a pyramid scheme that will collapse when enough consumers seek their rightful payments."

Some of those investors later said they had taken out second mortgages on their homes, run up huge credit-card bills and borrowed from friends and family to purchase the kits.

The Unique Gems case produced indictments against four individuals. Two, believed to be abroad, have yet to be caught. Another is believed to have died.
Miami Field Office Federal Bureau of Investigation
16320 N.W. 2nd Avenue
North Miami Beach, FL 33169
(305) 787-6409
For Immediate Release May 23, 2003
PIRELA OF UNIQUE GEMS INTERNATIONAL IS SENTENCED
Marcos Daniel Jiménez, United States Attorney for the Southern District of Florida, and Hector M. Pesquera, Special Agent in Charge of the Federal Bureau of Investigation, announced today that United States District Court Judge Ursula Ungaro-Benages sentenced Enrique Pirela to168 months’ (14 years) imprisonment and ordered him to pay $30,236,523.63 in restitution in connection with the Unique Gems International fraud case.

The Indictment alleged that from September 1995 through March 1997, Pirela served as President of Unique Gems International Corp. (UGI) in Miami. Pirela admitted he induced people to deposit approximately $90,000,000 in UGI as security for a work-at-home jewelry scheme. The Indictment alleged that victims were told that they would be paid as much as $60 per piece to assemble jewelry. The victims were directed to make a deposit of $3,000 with UGI, and that they would receive a jewelry kit equipped to make 30 necklaces. The actual value of the kit was approximately only $100. The Indictment further alleges that Pirela and the other defendants laundered the proceeds of the fraud through the accounts of businesses in Liechtenstein, which were owned by some of the defendants. Near the end of the UGI scheme, Pirela withdrew $1,000,000 in cash from the UGI account at First Union National Bank in Miami, Florida, and caused it to be deposited into a UGI account at Bank von Ernst & CIE AG, Zurich, Switzerland.

Pirela pleaded guilty on January 13, 2003, to a count of conspiracy to commit money laundering and to a count of conspiracy to commit mail and wire fraud.

Mr. Jiménez commended the investigative efforts of the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorneys Kerry S. Baron and Ellen Cohen.
Link To FBI Press Release

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