Gold Wars: inside Toronto’s cash-for-gold battle

Gold Wars: inside Toronto’s cash-for-gold battle

What happens when two gold buyers set up shop kitty-corner to each other in a rabidly competitive industry? A tale of death threats and gunshots in the night at Bathurst and Glencairn

Around noon on July 16, a large, Iranian-born man named Saeed Hosseini purportedly walked into Easy Cash for Gold, a storefront near Bathurst and Glencairn, and asked to speak in private with the owner, Jack Berkovits. Berkovits, a grizzled 58-year-old who also owns a chain of jewellery stores called Omni Jewelcrafters, took Hosseini to a nearby kosher restaurant called King David Pizza. They ordered coffee and sat. After much prevarication, Hosseini, a tae kwon do specialist and former mixed martial arts competitor, finally admitted that he had no gold to sell. Instead, he claimed he was there because of Maria Konstan, an employee of a competitor named Harold Gerstel, a man better known by his public moniker Harold the Jewellery Buyer. According to Hosseini, Konstan had asked him to kill Berkovits. Having said this, Hosseini quickly assured Berkovits that he wasn’t going to do it; he just thought Berkovits should know that Konstan not only wanted him dead, but was willing to pay someone to do it.

(Photograph: Keith Beaty/Getstock; Illustration: Asaf Hanuka)

Berkovits immediately contacted 13 Division at Eglinton and the Allen Expressway and gave a statement to two police investigators. Berkovits’s claims were later bolstered by Hosseini himself, who gave investigators the same story he’d given Berkovits. Konstan was arrested on July 22 and charged with five criminal offences, the most serious of which was counselling to commit murder.

The case was reported by a swarm of journalists and was revealed to be as convoluted as it was ludicrous. In one televised news interview, Hosseini, while hidden in shadow like a participant in a witness protection program, claimed that he’d worked for Gerstel for years, primarily as a collector of debts. Konstan, he alleged, had offered him $50,000 to take care of Berkovits; she had been so angry at the time that he could see the veins stand out on her forehead. The report then cut to an unnamed Gerstel relative, who insisted that Hosseini was never an employee and had been paid only on one occasion to keep an eye on the competition across the street. Not to be outdone, Harold Gerstel complained to one of the papers that the allegations were false: “All I can say is it’s a total frame-up,” he was reported as saying. No one, meanwhile, could explain what would motivate Konstan, an elderly, low-level employee of Gerstel’s, to hire a hit man.

The most interesting fact came from the police, who, either by accident or design, released a curious detail to the press: the tensions between the owners of Harold the Jewellery Buyer and Omni Jewelcrafters began in May 2009, when Jack Berkovits hung a “Cash for Gold” sign outside his store.

Gold is a notoriously fickle beast, largely because a trio of factors, both commercial and emotional, affects its price. The first is the holy tenet of supply and demand. Gold, like tin or zinc, is a commodity, and when the economy is good, demand for gold rises. Where gold differs from the more prosaic metals is that it’s primarily used for jewellery. So, for example, the Indian wedding season produces a reliable surge in demand. The second factor is inflation. For centuries, people have converted their wealth to gold during periods in which currency values are falling. During the Weimar Republic, when inflation rates broke one million per cent a month, war-weary Germans began sewing gold into the lining of their coats.

The third and perhaps most dramatic factor is impending catastrophe. Gold has always been purchased during periods in which the world seems poised to undergo terrifying change, it being an old joke that, during the Cuban missile crisis, people stocked their bomb shelters with food, water and gold bullion.

Between these factors, there exists a complex dance, a sort of fiduciary ménage à trois. People don’t use gold as a catastrophe hedge during periods in which business is good. Economies don’t miraculously expand in the aftermath of a major terrorist attack. All three factors shouldn’t, by definition, inflate gold prices at the same time. And yet, over the past couple of years, that’s exactly what happened.

In July 2005, gold was trading at about $425 (U.S.) per ounce. Around this time, its price began to spiritedly rise, an increase that economists saw primarily as a correction: the economy was still good, and the price of gold had essentially remained flat since a brief spike in the early 1980s. In October 2008, with gold trading at just under $900 an ounce, the stock market crashed, U.S. lenders began foreclosing homes with a rapidity that frightened even the most optimistic of investment analysts, and entire banks went out of business.

The plot: Saeed Hosseini told Jack Berkovits that he was hired to kill him by an employee of Harold the Jewellery Buyer (Photograph: Daniel Neuhaus; Illustration: Asaf Hanuka)

In other words, catastrophe. Whereas most other commodities dropped precipitously, gold—being gold—briefly dropped and then surged. At this point, concerns over inflation, spawned by government stimulus spending, elevated gold prices yet again, as did the policy of many Asian banks to purchase gold instead of paper currencies. As I write this in October, gold is trading at an all-time high of almost $1,380 per ounce, representing a rise of almost 200 per cent in five years. This figure, this close-to-tripling in price, has enriched some, tempted many more, and given rise to a consumer gold-buying industry that, while not exactly new, has rarely been practised with such a rabid, snarling vigour.

The progenitor of this industry, at least in Toronto, is Russell Oliver, a man known for so energetically branding himself as “the Cashman” that Time-Warner once sued him for wearing an outfit replicating Superman’s colour scheme on his TV spots. (He settled, agreeing to ditch the costume.) Oliver started out not as a gold buyer but as a jewellery retailer, and operated a store on Cumberland Street throughout the ’70s and ’80s. Though most of his customers were there to buy, he found that many wandered into his store wanting to know if they could sell him jewellery. He began buying himself, only to discover that dealing in both new and used jewellery was tricky, because many customers falsely suspected that his new pieces may have migrated from his used-jewellery cabinet.

After going bankrupt at his Yorkville location, he moved to his current address on Eglinton Avenue. There, Oliver made yet another discovery: instead of reselling people’s jewellery, it was far easier to offload all those Rolexes and diamond rings to watch and gem dealers. With the gold pieces, the most expedient strategy was to take them to a refiner, where they were then melted. “I often tell people that we’re not in the business of creating jewellery,” he told me, more than a little gleefully, in his cramped store. “We’re in the business of destroying jewellery.”

I visited Oliver’s refiner, a fourth-storey business just off Dundas Square called Express Gold that, like most refiners, will not deal with individual members of the public. Here, the sleepy-eyed owner, a man named Atef Salama, walked me through the process. Sellers come in and surrender their gold through an old wooden wicket. In plain sight, the gold is melted into a roughly contoured brick. The brick is analyzed for purity in an X-ray machine and then weighed. Both buyer and seller consult a flashing screen showing up-to-the-minute prices for gold, and the exact value of the seller’s gold is determined. The seller then has two options: he can take his gold back and pay Salama a two per cent refining fee, or he can give Salama the gold, accepting in return its cash value minus two per cent. The vast majority choose the cash.

Salama then sells his bricks to an industrial refiner, where they are rendered into pure, 24-carat gold. This gold is sold to jewellery manufacturers, who sell it back to the public in the form of bracelets, rings and necklaces. “And then,” says Salama, “the customer lets it sit in a drawer for 10 to 20 years, until the day comes when they sell it back to a jewellery buyer. It’s just a big circle.” The operative word here is big: on a good day, Salama will refine up to 50 kilograms of used gold, at a value of roughly $2 million. His cut: $40,000.

For years, Russell Oliver was the sole jeweller in Toronto who depended entirely on the buying of jewellery—the display cases lining one wall of his store are empty save for some abandoned white matting, all of which lends the place a slightly forlorn air. Around 2006, after the price of gold had been climbing for a year, other players suddenly joined the gold-buying field, namely a business near Finch and Dufferin called Oren’s Jewellery, and an ex-colleague of Oliver’s named Harold Gerstel, who had reinvented himself as Harold the Jewellery Buyer. Oliver was no longer the only gold buyer with clanging, cheaply produced, late-night TV commercials: Oren’s Jewellery and Harold the Jewellery Buyer began producing ads, as well. Together, these companies represented the early prospectors in Toronto’s cash-for-gold industry, and in each instance their message was identical: we will give you the most for your gold.

The provocation: Harold Gerstel was infuriated by flyers directing customers away from his business and over to Berkovits’s (Photograph: Daniel Neuhaus; Illustration: Asaf Hanuka)

When the price of gold began its quick ascent in 2008, Toronto was soon overrun with grubby, barred, gold-buying storefronts. The number of refiners multiplied, as well, with new players discreetly melting gold in industrial malls. The cheque-cashing franchises started buying gold, as did many jewellery stores, a frantic response to the fact that the recession-burdened public was buying little new jewellery. Even venerable old Birks began buying. “With the current high price of gold, there’s never been a better time to sell,” says the company’s Web site. “But who provides the best offer? Who can you trust? Birks’ expertise and experience ensures your peace of mind.”

The individuals who sell their gold also run the gamut. In an establishment like Russell Oliver’s, for example, the majority of customers are visible minorities. I had more than one buyer tell me that, in developing nations, where currencies are chronically unstable, it’s common for people to invest every penny of a windfall in gold jewellery, and then either sell it or pawn it later on. In other words, if you are from Senegal, say, or the Philippines, you are from a place where everybody sells their gold from time to time, a sensibility that is rapidly being imported to North America’s large cities.

Christopher Shortt, the owner of the famous old McTamney’s pawn shop on Church Street, explained it this way: “With gold trading at $1,300 an ounce, many people who are comfortable, in some cases even wealthy, are looking at old pieces of jewellery hanging around in drawers and asking themselves if they can’t stand to part with them.” It was not hard to believe: looking around McTamney’s, I was surprised by how many of his customers were well dressed and likely not from a country where currency fluctuation is a preoccupation.

The two men share a rabbi, who attempted and failed to broker a truce

There is another class of gold seller that does not, in any way, contribute to the legitimacy of the business. Detective Sergeant Rob Stewart is a 25-year veteran of the Toronto police force who, until last year, oversaw all of the so-called “pawn squad units” in the city. When we met, he told me how, in 2008, a gang of South Asian high school students started breaking into the homes of Indian families during their lunch hours and stealing as much gold as they could find. They would then turn it over to the Fagin-like middlemen who’d recruited them and be rewarded with the most common motivators of teenaged criminal behaviour: iPods, cellphones and cool sneakers. The middlemen, in turn, would sell the loot to storefront gold buyers, who would have it melted within the hour. By the time the police finally put the masterminds behind bars, they’d hit neighbourhoods from Scarborough to Newmarket to Etobicoke. “We called it Project Dish,” Stewart told me, “because the teens would drive around looking for houses at which there was a satellite dish that was rotated in such a way as to pick up the stations from India and Pakistan. And once they found one, bang—they’d hit that house.”

The problem, at least where policing is concerned, is as follows. Until recently, police were in the habit of collecting the daily sales records from gold-buying shops. This way, if the police found, say, a stolen bangle at a cash-for-gold operation, they would at least know who had sold it. (Jewellery buyers are supposed to hold an item for 15 days before refining it.) Three years ago, however, the Ontario Privacy Commissioner ruled that this practice represented an invasion of privacy.

I asked Stewart what police can do to make sure that cash-for-gold operations don’t act as fences for stolen gold.

“Honestly?” he answered. “Not a whole lot.”

For 20 years, Jack Berkovits ran a manufacturing company in Toronto called D. G. Jewellery. Following the company’s bankruptcy in 2002, he founded Omni Jewelcrafters at Keele and Highway 7 and opened a second location, at Bathurst and Glencairn, in 2003. Over the next few years, he opened six more locations and, in his spare time, became the opinionated host of a CFRB call-in show called You Don’t Know Jack.

From its inception, Omni was intended as a middle-tier jewellery shop: not as snooty as the tony Yorkville establishments, yet neater and better appointed than the caged gloom of a mom-and-pop pawn shop. There would be no security guards, no locking metal doors, no sepulchral lighting. Sharing quarters with the Bathurst location is a restaurant called the Java Café, which caters mostly to young Jewish mothers and Talmudic students. It, too, resides in the middle of the spectrum: though salads cost $12, the napkins are paper.

I met Jack Berkovits at the café. He wore a grey beard and yarmulke and was suffering that day from a bad knee—with each step he generated a profound wince. His skin was colourless, there were sallow pouches under his eyes, and he looked much older than his 58 years. After much deliberation, he decided that while he couldn’t discuss any details of the alleged crime—“it was all on the news, anyway”—he could tell me about his relationship with Harold the Jewellery Buyer.

The two grew up in the same Montreal neighbourhood, St. Urbain, and they participated in the same Jewish clubs. When Harold Gerstel opened his shop kitty-corner from Omni in 2006, the two attended the same synagogue. At first, they were civil with one another, largely because they had different client bases. While Berkovits’s customers were mostly well heeled, Gerstel’s customers were usually in need of cash. The nature of their operations was different, as well. Whereas Berkovits primarily sold jewellery, Gerstel mainly bought. There were times, Berkovits told me, when Omni would get walk-ins who were more suited to Harold the Jewellery Buyer, and they would be directed across the street.

Slowly, though, this cordiality eroded. According to Berkovits, many of the customers he directed to Gerstel’s would return to his store, complaining of being belittled and insulted. He stopped referring customers to Gerstel. In the spring of 2008, Berkovits says, Gerstel approached him on the steps of their synagogue: he’d heard from a reliable source that Omni was opening a dedicated gold-buying division. Though Berkovits insisted this was false, an argument ensued, during which Gerstel asked Berkovits not to do it. “It was that day,” Berkovits told me, “I decided that if gold continued to be growing in price and gold buying became important for my financial well-being, for the profitability of my business, or for the protection of my family, then I would be doing it.”

In May 2009, roughly a year after their exchange on the synagogue steps, Jack Berkovits hung a sign reading “Cash for Gold” outside his store. Three days later, Berkovits received a call from his and Gerstel’s rabbi, who attempted to broker a truce. The attempt failed. Gerstel phoned Berkovits and told him to take the sign down, claiming that it was deliberately targeting his business. The two argued, most likely because Berkovits offered a deal that Gerstel could only have interpreted as an insult: if a full week went by in which Berkovits did not meet a client complaining of ill treatment at Harold the Jewellery Buyer, he would remove his sign. Gerstel refused the offer, and the conversation ended.

It was the last time the two ever spoke.

The two men share a rabbi, who attempted and failed to broker a truce

Harold the Jewellery Buyer is located on the ground floor of a homely office complex on the southwest corner of Bathurst and Glencairn. Gerstel himself is about 50 years old, clean shaven, and has pale, freckled skin. He is smaller than Berkovits and, like Berkovits, wears a yarmulke. The first time I phoned Gerstel, he told me he was busy and that I should phone back later. I called back in half an hour, and he told me that he was still too busy to talk, and that if I hadn’t heard from him in a day or two, I could call him back. A day or two later, when I did call him back, the person who answered told me that Harold was busy and that I should call back another time. I phoned the store the following week. This time, Gerstel told me if I didn’t hear from him within a couple of days, I could write that he had declined a request to be interviewed.

Two days later, Gerstel called and said that I could ask him three or four questions, which he would attempt to answer. I told him that I wanted to hear about the antagonism that developed between himself and Jack Berkovits. Gerstel admitted that their relationship turned frosty when Berkovits put up his “Cash for Gold” sign. Still, he insisted, there had never been an outright fight, altercation or dispute between the two. Beyond that, Gerstel would say nothing, citing that the matter was before the courts.

Berkovits’s interpretation, meanwhile, varies significantly: soon after their last phone call, Gerstel hired people to patrol all four corners of Bathurst and Glencairn in sandwich boards touting Harold the Jewellery Buyer. According to Berkovits, these employees harassed and berated his customers and often tried to prevent them from entering his store. The shrillest of them was a 71-year-old Greek woman named Maria Konstan, the woman in Harold the Jewellery Buyer ads who proclaims, “It was so easy! Now I’m ready to shop!” Berkovits showed me snapshots he’d taken of Konstan; though it was difficult to discern harassment in a still photo, it was true that Konstan, a yellow-and-blue sandwich board over her shoulders, was at his doorstep.

In September, two young men, allegedly infuriated by the treatment they’d received at Harold’s, stood outside of Harold the Jewellery Buyer, handing out flyers directing traffic to Omni. (Though Berkovits swears he didn’t pay for the service, it’s not hard to imagine what Gerstel believed.) A scuffle ensued, and police were summoned. A few days later, Berkovits was walking across the street to his bank when he saw police talking to a group of people, one of whom was wearing a Gerstel sandwich board. The police stopped Berkovits and reported that the woman wearing the board claimed he had threatened to kill her. Satisfied with Berkovits’s expression of disbelief, the police left, and Berkovits returned to Omni. Minutes later, he heard a commotion. He went outside and was met by Konstan, who started ranting at him. “It was my first interaction of any kind with her,” Berkovits told me. “She screams and yells and threatens me. Who the hell am I to try to put Harold out of business? What kind of a Jew am I? What kind of a man am I? What kind of a human being am I that I would want to take the bread off his table?” According to Berko­vits, she then charged at him, only to be held back by another of Harold’s employees. (This was no easy task—the young man was Orthodox and forbidden by Jewish law from touching a woman to whom he isn’t related. Apparently, an unseemly dance ensued.)

In early December, police responded to a burglary alarm that went off at Omni in the middle of the night. Though nothing was missing from the store, the next morning Berkovits found a bullet hole in one of the windows. A couple days later, there was another alarm, and two more bullet holes. Police returned again in the new year and told Gerstel to stop posting sandwich board wearers on the northeast corner of Bathurst and Glencairn, where Omni is located. Gerstel complied.

During all of this, Berkovits was negotiating a lease on a strip a few blocks north. In July 2010, he opened Easy Cash for Gold at Bathurst and Fairholme, apparently not realizing until after the lease was signed that Gerstel had plans to open a store on the same strip. Immediately, Berkovits says, Gerstel posted a sandwich board wearer in front of the new store. Berko­vits began to receive threatening text messages, in which an unknown sender told him he was going to get what he deserved. Then, on July 16, there was another altercation with Konstan in the street, in which he claims she marched over to his car and hissed, “Who the fuck are you looking at?” One hour later, Berkovits received a phone call.

There was a customer at Easy Cash for Gold with a lot of gold to sell, and he wanted to speak directly to the business’s owner.

A couple of days after my first phone conversation with Harold Gerstel, he called me again, this time without any prompting on my part. He wished to clarify something. When Omni started buying gold, it was not the competition that he objected to—“Competition,” he told me, “is a part of life.” Instead, he believed that Berkovits, through the use of misleading signage, was trying to confuse potential Harold the Jewellery Buyer customers and trick them into entering Omni by mistake. He cited the men handing out information about Omni in front of his store, and he claims that, for a time, Berkovits had a sign at Easy Cash reading “Hard Cash for Gold,” which passersby could easily mistake for “Harold’s Cash for Gold.” The call ended, though not before Gerstel reiterated that he’d never had any open conflict with Jack Berko­vits.

On a good day, one Toronto refiner processes $2 million in used gold. His cut: $40,000

Following her arrest, Konstan was released on bail. She flew to Greece for a five-week vacation she’d already planned, missing her first two court appointments (she was not obligated to attend either). She returned to Toronto on September 13. It was about a month after her return that I reached her at her home, which happens to be around the corner from Easy Cash for Gold. “I am an old woman,” she told me. “I have high blood pressure, and I’m on medications. On the night I was arrested, I begged the police to give me my medicine, to give me a drink of water. I got neither.”

She was eager to tell her side of the story. Three years ago, Konstan and her husband went into Gerstel’s store to sell some jewellery. At the time, she was suffering from depression, and her doctor felt that some kind of regular diversion would be good for her. Gerstel gave her an unpaid job at his store answering the phone and dealing with customers. “Once in a while, Harold would give me a piece of jewellery or buy my lunch. In return, my hours were flexible, and I’d help out in any way I could. It was good for me. I enjoyed it.”

One of her duties was parading the intersection of Bathurst and Glencairn in a Harold the Jewellery Buyer sandwich board. She told me she never confronted either Berkovits or his customers outside of his store. Rather, it was Berkovits who continually harassed her. One day, she claims, he told her to “go and hide her ugly face,” a comment she explained to me did not bother her unduly. (“I told him to compare my face to his wife’s.”)

On the afternoon of July 16, Konstan walked to a fruit store just north of the intersection during her lunch hour. She says she was walking back through the intersection when she heard the honking of a car horn. She looked around and saw a person waving at her from a car stopped at a red light. She couldn’t see the person and continued walking. The horn honked again, and she went to the car. It was Berkovits. She says he told her that he was going to destroy both her and Gerstel. Disturbed by the unprovoked threat, she went back to Harold the Jewellery Buyer. Some time later, Berkovits was summoned to Easy Cash for Gold, where he met with an Iranian stranger who, at first, claimed he wanted to sell a lot of gold.

On the topic of Saeed Hosseini, Konstan is adamant that she never offered him money to kill Berkovits. “I didn’t like Hosseini from day one. And I never, ever talked to him about money, or killing, or harming anyone.” She also maintains that she was never quite sure about the business relationship between Gerstel and Hosseini, except to say that he worked on and off at the store, nominally to watch what the competition was doing. In the period leading up to July 16, she says she began to suspect that Hosseini secretly worked for Jack Berkovits. Today, she speculates that the two of them fabricated the plot in an attempt to damage both her and Harold Gerstel, and that this is what the two had met to discuss that day at King David Pizza.

In other words, there are competing stories. One has it that Konstan tried to hire Hosseini to kill Berkovits. The other is that Berkovits, working in cahoots with Hosseini, invented the plot to get at Konstan. The two are similarly bizarre. If rendition A is true, why wouldn’t Gerstel hire Hosseini himself? If rendition B is true, why didn’t Berkovits try to frame Gerstel? In either rendition, why does it all revolve around a little old lady?

Then there’s Hosseini, a shadowy character whose lone UFC fight is on YouTube. (He wore long hair into the ring, an error in judgment that his opponent violently exploited.) Hosseini didn’t answer my requests for an interview, and Gerstel would tell me little about their association, saying only that he’d known Hosseini for years and had given him a few days of work in early July—“Some business research and sales,” he said. Though what happened next is an antagonistic blur, it does seem that Hos­seini’s presence somehow caused the relationship between Harold the Jewellery Buyer and Omni Jewelcrafters to escalate from bitter to lunatic.

At press time, the date of Konstan’s trial hadn’t been set, and the feud seems to have settled down at the corner of Bathurst and Glencairn. Neither Berkovits nor Gerstel reports a significant loss of business. Since Konstan’s arrest, no more security alarms have gone off in the middle of the night, nor have the police had to settle any other scuffles. Konstan continues to work at Harold the Jewellery Buyer, and though Gerstel still employs sandwich board wearers, they are apparently sticking to neutral corners and are generally not getting in the way of Omni’s customers, if in fact they ever did.

As for Berkovits, he still attends the same synagogue as Gerstel every morning. One goes to the front, one goes to the back, and they never, ever nod hello.