Sotheby's buys back $83m diamond after new owner defaults


Pink Star Diamond auction

$83m is a lot to default on. Yet high class auction house Sotheby's has been forced to buy a 59.6 carat pink diamond back after its buyer defaulted. Isaac Wolf, a diamond cutter from New York, originally bid for the stone, highly prized for its rarity value, last November. But the deal, in the end, turned out to be less than flawless for Sotheby's.

Pricey pink dreams

Bloomberg reckons the stone, at the time, fetched the third highest auction price in 2013 for any collectible. Surpassing it was Francis Bacon's 1969 triptych Three Studies of Lucian Freud "that went for $142.4 million at Christie's in New York, and Andy Warhol's silk-screen painting Silver Car Crash (Double Disaster)," sold for $105.4 million says Bloomberg.

At the time, buyer of the Sotheby's $83m diamond Wolf said he was buying it not with cash from his own piggy bank but from the deep pockets of several financial investors, betting on larger future profits. Some hope. (See Wolf interviewed here.)

He said at the time: "I saw a great opportunity that I don't think anyone in the industry realised - and I took advantage of it."

In a statement Sotheby's said the "extraordinary diamond is recorded in inventory at approximately US$72 million, which is the U.S. dollar equivalent of the corresponding purchase price in Swiss francs. Sotheby's has reserved all of its rights and remedies against the defaulting purchaser."

Or how about Gandhi's sandals?

This Sotheby's setback resets the current auction record for a diamond or jewel to The Graff Pink, a 24.78 carat Fancy Intense Pink diamond; it raised more than $46m at Sotheby's Geneva in November 2010. Some distance from the $83m Wolf paid for his pinkie.

Other recent auction flops include Victoria Beckham's wedding tiara that was expected to raise up to £25,000 at Bonhams. In the end it failed to hit an undisclosed reserve.

But perhaps one of the most recent bizarre auction sales was that of Mahatma Gandhi's sandals. The sage's greying, heavily worn flip-flops took £19,000 at Ludow Racecourse in Shropshire last year. A pair of his glasses raised even more - £34,000.