Gold Coast Ponzi schemer Robert Diamond, who targeted friends in $12M fraud, sentenced to 6 months in prison

Robert Diamond ran in a close-knit circle of friends centered around the Pine Hollow Golf Club in East Norwich. They celebrated their children’s weddings and birthdays together. And when Diamond was denied credit by the banks for his car loan business, he turned to his clique for help.

On Aug. 7, in a Nassau County courtroom, Diamond, 69, of Manhattan, was led away in handcuffs in front of many of those same friends to begin serving a 6-month jail term, followed by 5 years of supervised release after pleading guilty on eight counts of fraud, grand larceny and charges related to his nearly $12 million Ponzi scheme.

The feeling of betrayal by Diamond was palpable among his circle.

"He was probably one of my best friends in the whole world," Wayne Wattenberg, who with his son lost their $600,000 investment to Diamond, said. "We went on vacations together, spent time together. Our daughters moved in after college and shared an apartment together. We went out of the country together."

Although Diamond, under the plea agreement, is subject to a civil judgment against him by his friends, none of them expect to receive more than a few thousand dollars back from him, if that.

A failed car loan business

His business, Diamond Finance Company in New Hyde Park, lent money to car buyers with bad credit at 20% interest, holding onto the pink slip and repossessing the vehicle in case they defaulted, victims' lawyers and court papers say. He also lent money to used car dealers under the business name Diamond Floor Plans, providing them money to increase their inventory, according to his plea agreement.

The businesses did well at times, according to court records, until they didn’t. He struggled during the 2008 financial crisis and again in 2015 when competition in the business cut into his bottom line, court records show.

Regardless of the reality of his declining business, Diamond told his friends that "business was booming," according to his plea agreement.

In 2020, after the pandemic crippled his business and his investors came for their money, he could no longer pretend and was forced into involuntary bankruptcy, said Michael Fox, a lawyer for the victims.

"I falsely represented to the investors that the company’s business was prospering to ensure they would continue investing in Diamond Finance Company," he said in his pleading.

But it was that circle of 30-plus friends and their family members who are left holding a nearly $12 million loss, according to court records.

In May 2020, his circle of investors received a letter telling them that because of the pandemic shutdown, he couldn’t send their monthly interest payment, which was as much as 10% on their investment.

Running a pyramid scheme

This prompted a run by investors, who wanted to cash out all at once. Diamond was forced into involuntary bankruptcy in Central Islip, the victims and their lawyer said.

He tried to pay back some of the money to his in-laws, but bankruptcy Judge Robert Grossman ordered the money returned, he also deemed Diamond to have been running a pyramid scheme.

"While operating [Diamond Finance Company] as a Ponzi scheme, the defendant made material misrepresentations to investors regarding the financial condition of [Diamond Finance Company] for the purpose of inducing further investment," the judge ruled.

When confronted by state and federal investigators in 2023 in the Manhattan apartment he moved to with his wife, Diamond appeared unapologetic.

"What these people put me through," he told Nassau County District Attorney Det. Randy Cox. "It’s been torture, a bunch of millionaires, sore losers."

It’s unclear why the Nassau County District Attorney’s Office settled on such a light sentence. They declined to comment on the case.

Sandra Camhi, whose late husband and quadrapalegic stepson collectively lost more than a million dollars in Diamond’s scheme, said prosecutors told her they could not find any money for restitution.

High-flying lifestyle

Lawyers say that Diamond lived a high-flying lifestyle, with trips abroad, country club memberships and lavish spending.

He once flew down to Florida and returned the same day to purchase a Hermes Birkin bag, which can go for more than $30,000, for his wife, multiple ex-friends said.

His lawyer, Todd Spodek, who secured the light sentence for Diamond, said he can’t pay back the money, because there is no money left.

"Despite years of litigation and investigation, no hidden funds were found, nor is there any evidence to suggest that any exist," he told the court at sentencing.

The defense lawyer argued that because of Diamond’s age and his lack of prior criminal history, 6 months was an appropriate sentence.

Spodek also cited a history of heart disease, high cholesterol, anxiety and depression as reasons Diamond would have a difficult time behind bars.

Steven Camhi, 62, who became paralyzed at the age of 19 from a diving accident, will also have harder time with his health. He and his family lost more than $1 million in the fraud, court records show.

Camhi, who relied on the monthly interest payments from his investment with Diamond to support around-the-clock health care, now worries about being forced out of his home. He said he had to shed some assets to qualify for public health care in South Florida, where he now lives.

"There's always the fear that without the proper care — that's when you have to deal with less — can always lead to serious health issues and potentially institutionalization," he said. "I'm always going to be fearful that because I'm dependent on a state plan, state help, Medicaid, there's always the potential for these programs to be cut or even shut down."

Besides the economic hit they took from Diamond’s fraud, his friends said they feel the court system let them down.

"If somebody said to you, you can steal $12 million and get away with it, but if you get caught, you're only going to get six months — maybe I should take that chance?" Wattenberg said.