Philadelphia News & Search
With an elaborate sting, undercover Homeland Security investigators in Philadelphia hoped to ensnare a black-market profiteer peddling African conflict diamonds to unscrupulous buyers in the United States.
What they got instead was Karl Loibenbock, a two-bit Namibian scammer who tried to pass off hunks of topaz as illicit gemstones.
But as the 39-year-old real-estate-agent-turned-fraudster faced sentencing Wednesday, his lawyer raised a puzzling question: How should a man be punished for a scheme that set out only to defraud crooks, which in this case didn’t actually exist?
The answer offered by U.S. District Judge Nitza Quiñones-Alejandro? With a year and a day in federal prison.
“Mr. Loibenbock thought he was dealing with unscrupulous diamond merchants. The agents thought they were dealing with an unscrupulous diamond trader,” his lawyer Mark Wilson wrote in court filings. “Like a Shakespearean comedy, the plot in this matter was driven by each party’s misconception about the other and in the last act, when the truth was revealed, the whole thing fizzled out.”
In handing down the sentence Wednesday, Quiñones-Alejandro offered no indication of her thoughts on the question posed by Wilson. Still, the punishment she imposed departed significantly from federal sentencing guidelines and was six months below the 18-month sentence sought by prosecutors.
“At the end of the day, the defendant is an admitted fraudster,” said U.S. Attorney Vineet Gauri. “Just because he’s trying to fleece criminals doesn’t take away from the fact that he was still trying to fleece people.”
Loibenbock, a former real estate agent who said he turned to crime after the real estate market collapsed in his home country, thanked the U.S. justice system for the treatment he had received since his arrest last year. He noted that he had received a court-appointed attorney, a clean bed, and three meals a day — luxuries that might not be afforded to incarcerated individuals in his own country.
“I stand before you and I stand before my maker and gladly submit myself to your authority,” he said.
Since 2003, federal law as sought to stanch the flow of conflict diamonds into the United States to prevent their sale from benefitting warlords or insurgents in war-torn, diamond-producing nations like Angola Sierra Leone and the Democratic Republic of Congo.
The United States is one of 81 nations participating in an initiative known as the Kimberly Process, which requires imported rough diamonds to be shipped in sealed containers with a certificate affirming their origins.
But Loibenbock, whom investigators first encountered over the internet in 2013, made clear from the start that the Angolan diamonds he purported to be selling online were not Kimberly-certified and called the certification process “a scam” and “a government prank.”
Over the next three years, he negotiated the sale of six rough diamonds with agents, who passed themselves off as buyers for a wholesaler in the United States. He agreed to travel here to complete the transaction after investigators sent him a photo of $250,000 stacked in cash bundles on top of a current newspaper to prove they were prepared to pay.
But while Loibenbock was passing through South Africa en route to Philadelphia in 2015, customs agents discovered the six supposed diamonds hidden in his underwear, arrested him and held him in for five months in Cape Town before realizing the gemstones were fakes.
U.S. investigators, however, remained in the dark. And, undeterred, Loibenbock arrived in Sharon Hill, Delaware County in November to complete the transaction, only to find himself under arrest once more.
This time, he confessed immediately and walked federal agents through his crime – one his lawyer described Wednesday as fairly typical in Namibia, where “you can pick up these stones off the ground in some desert areas of the country.”
Loibenbock admitted that he had pulled the same con before in his home country, netting a profit of $40,000 and had made overtures to another potential buyer in Los Angeles around the same time he was conversing with the undercover investigators.
He pleaded guilty to one count of wire fraud in January.
“My client – as well as several other individuals in Namibia – saw a way to profit,” Wilson, his lawyer, said Wednesday. “It’s a unique type of fraud. It should not be punished in the same way.”
Philadelphia News & Search