Controversy Centers on Texan’s $10 Find : Sapphire May Not Be a Star After All

Roy Whetstine was a broke Texas gem dealer a year ago when he bought an uncut stone for $10 from a box of rubble at a gem conference.

He says he knew immediately that the potato-sized specimen was a rock for the ages: a prized star sapphire, the largest ever, and he quickly became a celebrity with a $2.28-million appraisal and a story that everybody wanted to believe. Whetstine and his rock, which was nicknamed “The Star of America,” were written up by People Magazine and the New York Times, and they were hailed in network news segments and on the “Joan Rivers Show.”

It now appears, however, that Whetstine’s Cinderella story may be turning into a pumpkin tale. The man who appraised the stone--Fallbrook, Calif., jewelry store owner Lawrence A. Ward--was thrown out of the American Gem Society last November as a result of complaints that he had inflated appraisals. Court records in San Diego County show that Whetstine and Ward have been accused in two civil suits of inflating the value of stones.

And leading gem industry authorities meeting here this week blasted Whetstine’s claims, saying that his stone is worth closer to what he paid for it in the first place.

“I’ve handled it and I’ve spoken to the owner,” said John Sampson White, curator of the National Gem and Mineral Collection at the Smithsonian Institution. “It reconfirmed all my initial opinions: It’s an insignificant stone.

“We wouldn’t buy it,” said White. “We wouldn’t want it, I don’t think, even if it were offered to us. We certainly couldn’t accept it as a gift, given the crazy values on it.”

Five Experts Interviewed

The Times talked to five gem experts here, most of whom had either examined the stone or handled it, and the consensus was that the sapphire, now cut and polished to a fine lavender luster, was at best worth no more than a few thousand dollars, not millions.

“You would put it on your desk to keep papers still,” said Jean F. Moyersoen, editor of Gemstone Price Reports and an independent gem appraiser for Sotheby’s auction house.

Whetstine suggested that The Times call appraiser Elly Rosen, an independent appraiser from Brooklyn who has been a gem consultant for the Internal Revenue Service. Rosen said: “It is not of gem variety. . . .”

Asked about the value of the stone, Rosen said, “I don’t think the word million can enter into conversation. I don’t think six figures can enter into the conversation. I think the difficulty would be in the five figures. It is not what it has been made out to be. It is nice to see, it is an oddity . . . but that’s it.”

Just what the soft-spoken Texan may eventually receive for the stone, gem experts here contend, may result more from the publicity that Whetstine has been able to generate than from the stone itself.

Whetstine, 47, now backs away from all dollar estimates of value, but has a ready answer for his critics.

“If I had any questions about the stone, I wouldn’t have brought it here and put it on display,” he said. “I was already in negotiations; I didn’t need controversy.”

Special Display Case

Whetstine has been showing the stone in a special display case in a hotel lobby this week as thousands of gemologists, jewelers and rock hounds wind up the annual Winter Gem and Mineral Show. At any given time, as many as a dozen people could be found snapping pictures or staring at the six-pointed star in the stone.

For security reasons, show promoters have hired off-duty uniformed Pima County deputies, but when the stone is out of its showcase it may be found in a pouch tucked inside Whetstine’s right cowboy boot.

The Texas dealer talks only in promising generalities about plans for the stone. He says he is in “negotiations.” A man is flying in from Japan to see it. There may be a good-will tour of China. Offers for more than $2 million have been made, and presumably refused.

“What’s the value of a gem anyway?” asked Frank Schuster, a small gem dealer from Tucson who stood at the display case on Wednesday. “It’s in the eye of the beholder.”

Ward and Whetstine have been accused of inflating gem values before.

Pair Sued Twice

In 1979, the two men were sued in San Diego County Superior Court by a man who said they inflated appraisals to induce him to invest in gems. The case was settled out of court and terms were not disclosed. Another civil suit filed in San Diego courts in 1981 alleged that Ward and Whetstine inflated the value of two black opal and diamond rings. Alex F. Poch, who filed the suit, claimed that he bought the rings from Whetstine for $50,000 after Ward appraised them at more than $300,000.

Whetstine then agreed to sell the jewelry on consignment from a gem store he owned at the time in Las Vegas, according to the suit. But the deal went sour, Poch said in the suit. Whetstine lost the rings and never paid the $75,000 he promised Poch in compensation, the suit alleged.

The suit indicated that one of the rings, valued by Ward at $160,500, was at one time appraised for only $40,000 by a La Jolla jeweler.

In June, 1985, the jury ordered Whetstine to pay Poch $64,000 for breach of contract. The jury also found Whetstine liable for “fraud, deceit and misrepresentation” but awarded no damages. Ward was not found liable.

Asked this week about the case, Whetstine said the judgment had nothing to do with fraud but a simple “credit debt.” He also said that the verdict, in the wake of hospital bills for his heart by-pass surgery, forced him to declare bankruptcy last year in Kilgore, Tex.

“I owed money, I couldn’t pay it and I was sick and that was it,” he said.

Membership Terminated

Ward faced a separate set of problems from his peers in the American Gem Society, which had received complaints about inflated appraisals by Ward. In November, the group terminated his membership, according to Laurie Hudson, the society’s marketing manager in Los Angeles. The organization of 3,000 gem dealers and jewelers from around the nation rarely terminates memberships, she said.

Ward, reached here at the gem show, said he was expelled from the group because of a “personal vendetta” against him and he is considering a lawsuit against some of the society’s members.

Since November, both men have been swept up by a media bandwagon that has other gem experts upset. The current issue of People Magazine includes a two-page article on the rock.

“It’s been a media blitz and the unusual and peculiar thing about this whole thing is that none of the people in any of the national press, in newspapers, magazines, radios--nobody ever questioned it (the value of the stone),” said Cosmo Altobelli, a North Hollywood jeweler and appraisal committee chairman for the American Gem Society. “They thought it was a fairy tale story and ran with it.”

The story Whetstine tells began in February, 1986, when he walked onto the floor of the gem show--actually a series of exhibits staged in 11 hotels throughout the city.

Kept His Promise

In his pocket were two $5 bills--one each from his young sons. As was his custom, he had promised the budding lapidaries that he would purchase small rock specimens for their growing collections.

Stopping at the booth of a grizzled mountain man, Whetstine began rummaging through some open Tupperware bowls--in one account he said it was a cardboard box--that contained miscellaneous rocks. Asking price: $15 each.

That is when he spotted the stone with the special glimmer. Whetstine said he talked the mountain man into selling the stone, which supposedly came from Idaho, for $10.

“I bought it with their (his sons’) money and I bought it for them,” Whetstine said.

When the gem dealer stepped into the Arizona sunlight, something wonderful happened: the rays showed that there was a star, or asterism, in the sapphire.

Highly Unusual

Finding a star in native sapphire is highly unusual, gem experts say. Most native sapphires, which are low-grade corundum, are good only for industrial uses.

Although Whetstine’s was opaque and marked, the star was distinct. Encouraged, he had the Gemological Institute of America Inc. certify it in March as 1,906-carat, natural star sapphire.

In April, Ward flew from San Diego to Texas to appraise the rock. Whetstine said he hired the California appraiser at $500 a day because others wanted too much money for the job.

Ward said he studied the stone, on and off, for two days before rendering his opinion. Uncut, it was worth $2.28 million, or $1,200 a carat. Cut, $2.5 million, or $2,000 a carat for the smaller stone. (Stones get smaller when cut.)

Those values, he conceded, were based largely on Whetstine’s claim that the rock had come from Idaho, a claim that cannot be confirmed because Whetstine will not say who sold him the rock. Had the rock come from India or Sri Lanka, where most star sapphires are found, Ward said, the value would have been dramatically less--$50 to $100 a carat for the rough stone.

Difficult to Explain

“I don’t know how to explain this to you, but when I take all of these factors and churn them around in my head, I start coming up with some figures of what this stone’s potential is, because again as a collectable, who knows? It could go into an auction and bring a multi-amount of money,” he said.

One factor that could contribute to the ultimate sale price of the stone, Ward said, is how much publicity Whetstine has received.

“If a million dollars worth of publicity hits something like this, it creates a demand, an interest in the public mind,” Ward said.

And that is exactly the point, critics said.

“The appraisal was a self-fulfilling prophecy,” said Rosen, who added that Ward’s appraisal was flawed because it did not rely on comparables and it predicted what the stone would be worth when it was cut.

Ward said that if he were asked to appraise the stone today he could not assign a value to it. “All this hullabaloo out there, all the controversy, all the hassle, the publicity on the stone itself, if someone wants to come along to buy it, I have no idea in the world how to put together any process of determining the value,” Ward said.

Times staff writer Marcos Breton in San Diego contributed to this story.