Cos Altobelli Tackles the Drew Brees Case
Friday, July 12, 2019
Recently, Cos Altobelli, ECGA, made the news in relation to a high-profile celebrity when he testified as an expert witness on behalf of New Orleans Saint’s Quarterback, Drew Brees. Brees bought $15 million in colored diamonds from a San Diego jeweler over the course of a decade. His lawsuit against that jeweler alleged that when Brees had the items appraised, he discovered the pieces were worth much less than he had paid.
You can read more about the Brees case in this article from JCK. Cos, who created the CGA Program for the American Gem Society, answered some questions for Spectra Update not only on the Brees case, but addressed the question of jewelry as an investment item, and what's ethical versus unethical when it comes to markups.
Spectra Update: How did you get involved in the Drew Brees case?
Cos: Normally, I get my cases by referral and sometimes attorneys use a firm that specializes in expert witnesses. A specialty firm contacted me to participate in the Brees case. Sometimes expert witnesses are researched on the internet (I have been chosen this way) also. When recommended, there is always a discussion about the case in order to feel comfortable; that “it is a good fit.” The CGA title comes in handy when compared to other appraisers. It brings validity and credibility to my testimony. I was even able to show the jury my book on the stand. I have never done that before, however, credentials matter to the client and to the juries.
Spectra Update: How do you reconcile the large difference between what the client paid for the item you are appraising, and the actual appraised value? How do you disclose this to the client responsibly, ethically, and compassionately?
Cos: An appraiser reconciles the difference between what the client paid for the item by the use of comparable items. Appraisers should be diligent in saving historical lists for the purpose of hypotheticals, particularly those that are not current. When you have documentation that substantiates “bedside manner” as to what is the common practice. I have not lost a case yet because of reliable documentation.
Spectra Update: How do you determine a value on rare diamonds with few comparable items? How did you arrive at the $6 million value in this case?
Cos: When the items are rare, typically there are not many comparable items to rely upon. However, hopefully you can justify with information of when and where the items were bought or sold and where or by whom in creating a reliable foundation. It is also necessary to apply the market conditions at the time, i.e., the 2008 recession.
The jury decided the six million award.
Spectra Update: What constitutes an “ethical” markup? What markups are “unethical”? How should jewelers communicate the difference between “retail price” and “fair market value” to a customer that is upset their jewelry appraises for less than what they paid?
Cos: The cost of an item at $100 would be marked up and sold for somewhere between $180 and $350, an average of 265%. This would not hold true with “Carriage” houses, e.g., Tiffany, Cartier, etc. Provenance plays a heavy role in most situations and should be used appropriately. In most states, there is a Uniform Commercial Code, which has a provision called “Unconscionable Pricing.” An example could be selling an item that cost $100 for $1,000 where most of the retailers in that geographic area would charge perhaps $300. Naturally, there can be many reasons why this may not be applicable.
Spectra Update: Do you think that it is unethical for a jeweler to give investment advice to a client? Is it ethical to sell “investment” diamonds?
Cos: Many jewelers have the knowledge and experience in which they can opine on an investment quality item. Perhaps historical information may be available to substantiate the opinion. In any case, a buyer needs to get more than one opinion if they are spending millions on investment stones.
Spectra Update: Do you have any advice for AGS appraisers, or people who plan to take their CGA, if asked to provide expert testimony in a case?
Cos: It is very important for anyone wishing to pursue this specialized field of expert testimony to take the Advanced Personal Property Appraisal (APPA) course offered through the AGS.