David Durose, prosecuting, alleged that the boiler room fraudsters cold-called scores of unwitting victims and promised them sky-high returns.
One retired customer used up the last of his savings buying gems for £140,000, but the precious stones were worth little more than £10,000, jurors were told.
Alleged mastermind Adam Simmons, 27, is on trial with his father Michael, 53, and brother-in-law Adam Leach, 29.
They are said to have run the year-long scam under the guise of No1 Gems Ltd, based in Hove, West Sussex.
By the time the firm was raided by police in September last year, the trio had closed down the operation and were preparing to start a similar firm called Pinnacle, based in Eastbourne, East Sussex.
Mr Durose said: “Basically No1 Gems was engaged in what is known as a boiler room fraud.
“It is a specific type of fraud in which individuals are targeted with cold-calling and pressured into making purchases of items such as shares, equities or financial instruments – or in this case, diamonds.
“The purchasers were sold the items for prices vastly above what the items were worth.
“In this case they purchased small coloured diamonds at a markup as high as 900 per cent or more.”
Glossy brochures were sent out boasting that employees at No1 Gems had more than 100 years of experience in the jewel business.
The court heard that the defendants also lied about the closure of diamond mines and a potential £15m deal to sell jewels to HSBC to get customers to part with their cash.The diamonds were sourced by the trio from a catalogue published by Langermans Diamonds .
William Doorbar, a pensioner of Stoke, Staffordshire, was targeted by the alleged fraudsters. He initially agreed to buy one 0.26 carat green diamond for £5598 in March 2012 after No1 Gems told him he could make annual returns of 20 per cent or more.
Mr Durose said: “Even if the rate came through, if the diamond was originally purchased for £350, after three years it would still be worth less than £1000. This was not an investment; this was a scam.”
Mr Doorbar bought a total of nine stones from the firm and used the last of his savings for his final £9000 purchase.
No1 Gems agreed to refund him £3000 when he raised his suspicions, but the cash never materialised.
Another victim was offered a collection of 500 diamonds for £200,000 and told he should remortgage his house to finance the deal, the court heard.
Adam Simmons, of no fixed UK address but has homes in Malaga and Marbella, Spain, Michael Simmons, of Pevensey, East Sussex, and Adam Leach, of Eastbourne, East Sussex, all deny conspiracy to defraud and fraudulent trading.
The trial continues.