Daniel Bethencourt

Detroit Free Press

An armored vault in Detroit was supposed to hold more than $4 million in platinum and other precious metals.

Yet when the rightful owner of the metals asked for a withdrawal in February, the vault’s staff made an unsettling discovery: The platinum had been swapped with worthless metals, such as copper and tin.

Now a lawsuit and a felony criminal charge in federal court claim that the culprit was Gregory Koukoudian, a Berkley-based jewelry wholesaler who had trusted routine access to the vault. The court records allege that, in what amounts to a feat of immense patience, Koukoudian gradually withdrew platinum that he was legally entrusted to handle and replaced it with less precious equivalents over a period of months or even years.

In fact, the lawsuit says officials aren’t sure exactly how long the swapping has been going on. Koukoudian had access to the vault for at least nine years.

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He now stands accused of one count of wire fraud by federal prosecutors, who filed a criminal complaint against him in March. A conviction would carry a maximum sentence of 20 years in prison and a $250,000 fine. And on Sept. 14, the platinum’s owners sued security company Brink’s Inc., accusing them of failing to protect their valuables.

Koukoudian has not been convicted of any wrongdoing, and has pleaded not guilty to the charge, court records show. An attorney for Koukoudian, Michael Rex, declined to comment, citing the ongoing case. Voice mails left with a manager at Brink’s went unanswered.

“It was a completely shocking situation,” said Linus Drogs, a friend of 35 years and former business partner who is now president of Au Enterprises, a jewelry manufacturing company. “It’s equivalent to a death. … He was always well-liked and very well missed.”

Koukoudian has been involved in the jewelry trade for his entire adult life. He worked at C.R. Hill, a family owned jewelry supply warehouse that has been in business for about 100 years, and he owned C.R. Metals, a nationwide supplier of raw metals to the jewelry industry, Drogs said. C.R. Metals in particular had several clients who churned out millions of dollars in sales revenue.

His work made him well-known locally. “You could call any jewelry store in the metro Detroit area and they’re familiar with Greg Koukoudian,” Drogs said.

His access to the Brink’s vault dates to at least 2006, when he started a contract with a large precious metals corporation named Auramet. His task: withdraw platinum from the vault at 1351 Spruce St. in Detroit, mix the platinum into an alloy that could be more easily sold as jewelry eventually, and then deposit the alloy back into the vault.

This arrangement was unique in that Koukoudian wielded a large amount of trust to work with the vault as he saw fit. He managed that arrangement because of a longtime relationship with a partner at Auramet, according to Drogs.

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“This was an understanding that Greg was allowed to withdraw and deposit Auramet’s platinum at will,” Drogs said. “I don’t think there were checks or balances in place.”

Prosecutors say that instead of placing the salable platinum back in the vault, he steadily added worthless materials. As far as looks ago, the act would not be hard — it’s fairly easy to make fake platinum that looks realistic, said Ron Kelly, technical supervisor with Hoover & Strong, a Richmond, Va.-based refining and manufacturing company for precious metals.

But real platinum is very heavy, and copycat metals would fail a closer inspection, Kelly added.

Platinum is extremely rare, even rarer than gold. While its name is well-known for its use in jewelry and catalytic converters, few people have actually seen the metal up close. In fact, the sum total of all the platinum ever mined would still fit into a large living room, according to Drogs and the investment advice group Outsider Club. The metal's price reflects that scarcity — it recently traded at around $1,000 per ounce, while gold has traded slightly higher, at $1,300 per ounce.

Yet Koukoudian isn’t just accused of swapping the precious metal. He's also accused of writing “fictitious” inventory reports that disguised his actions. In theory, Brink’s employees should have been weighing the vault’s materials on their own, but they failed to do that here, the lawsuit claims.

The result was that even as the company sent written confirmations to Auramet that the property was secure, those confirmations drew directly from allegedly fraudulent data that Koukoudian submitted.

The steady replacement of the metals was happening “right under the noses of Brink’s vault clerks, without any detection,” the lawsuit claims.

“This is an unfortunate set of circumstances that Greg made several bad business decisions that put him in this position,” Drogs said, adding that he thinks Koukoudian is guilty: “He was helping himself to somebody else’s material.”

The alleged scheme fell apart in February, when the company that owned the platinum decided to withdraw at least some of the metal. It quickly became clear there was a problem.

An Auramet official arrived at the vault along with three employees from Brink’s, and a metals expert used specialized equipment — “an XRF Assay gun” — to see what kind of metals were really in the vault, the September lawsuit claims. The vault should have weighed 330 pounds, with at least 250 pounds of platinum.

The actual weight: a humbling 72 pounds, with just 3.5 pounds of platinum in plate form.

In the wake of the discovery, Auramet filed a lawsuit against Koukoudian’s company, C.R. Metals, and others in March. The suit was later withdrawn on jurisdictional grounds, but it alleged that Koukoudian actually admitted to law enforcement that he wrongfully took metals from the vault.

That same month, Koukoudian told Drogs that his company was going out of business. A few months later, in July, Koukoudian was charged with the count of wire fraud. That case is ongoing.

C.R. Hill, the company where Koukoudian once worked, is now run by Koukoudian’s ex-wife, who supports her two children through the business that struggled in the wake of its association with her ex-husband. The company “had no involvement with C.R. Metals or Greg's issue with deceiving (business partners),” said a lawyer representing C.R. Hill, Keefe Brooks, in an e-mail. Brooks added that the case has been “devastating” for the family.

And the Birmingham-based lawyer who filed the lawsuit on behalf of Auramet, Sidney Frank, said that in his 50 years of practicing all sorts of litigation, “This is one of my more interesting cases. That’s about all I can say.”

Contact Daniel Bethencourt: dbethencourt@freepress.com. Follow him on Twitter @_dbethencourt.