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Ex-Minn. diamond seller admits dealing in pot

MINNEAPOLIS (AP) — A former diamond seller in southeastern Minnesota has admitted to dealing millions of dollars of high-grade marijuana and stolen gems.

Richard Kay, 39, of Zumbro Falls pleaded guilty Tuesday in federal court to trafficking in marijuana, transporting stolen goods and 11 counts of money laundering.

Kay, who did business in Minnesota as "Kay Diamonds," admitted that from 1995 to last year he distributed more than 2,200 pounds of marijuana. He described the drug to authorities as high-quality, worth up to $5,000 per pound. Court records say a source who cooperated with the investigation reported buying about 1,500 pounds of marijuana from Kay over several years for $2 million.

Kay also admitted to transporting stolen gems from 2001 through 2009 and working with an unnamed co-conspirator who worked for an Ohio-based diamond distributor. The co-conspirator had access to company jewels, and she supplied Kay with diamonds and other gems stolen from the company, federal authorities alleged.

According to the indictment, Kay made about 10 trips between Minnesota and Ohio with 50 to 100 stolen gems, paying the employee between $50,000 and $100,000 for the jewels. But the indictment said that "was a small fraction of the actual value of the stolen goods."

Four other men, all from Rochester, have pleaded guilty to participating with Kay in dealing marijuana and hiding assets from the sales.

Investigators say Kay used hundreds of thousands of dollars in proceeds from illegal activities to buy jewelry, a boat, a luxury automobile and lakeshore property in Zumbro Falls. Federal authorities say they are pursuing recovery of those items, along with at least $65,000 in a savings account and $5,000 in cash.

Kay's attorney, Robert M. Christensen, told the Star Tribune ( on Wednesday that his client "did some legitimate selling of diamonds" while running his business and would often travel overseas.

Christensen said that Kay faces a 10-year mandatory minimum prison sentence, "and we're hoping to get it down to that."

Sentencings for Kay and the others have not been scheduled yet.


Information from: Star Tribune,

Copyright 2012 The Associated Press.

Denton (Denny) Newman Jr.
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