Aging gangster Benjamin "Lefty" Ruggiero is introduced to a jewel thief named Donnie Brasco. Donnie impresses Lefty by threatening a diamond dealer whom Donnie suspects of selling Lefty a fake ring. Lefty teaches Donnie the rules of the Mafia and introduces him to several "made men" including Dominick "Sonny Black" Napolitano, and Nicholas Santora, as well as caporegime Alphonse âSonny Redâ Indelicato to whom Lefty owes money and is disliked by Sonny Black.
Donnie Brasco is actually Joseph D. Pistone, an undercover FBI agent. His wife hates his job, and the couple have heated arguments throughout the film. At home, Joseph's behavior becomes more and more like the criminal he pretends to be.
After the Bonanno family's street boss is killed, Sonny Red assumes the new position. Sonny Black is promoted to captain, angering Lefty, as he provided for Sonny Black's family while the latter was in prison. As the crew runs a series of successful shakedowns and hijackings in Brooklyn, Donnie collects more information for the FBI.
Due to Joseph's success at infiltrating the Mafia, a man from Washington, Dean Blanford, takes an interest in the case. He asks Joseph to incorporate a Miami-based FBI agent, Richard "Richie" Gazzo, into the operation. Joseph is reluctant but convinces Sonny Black and crew to meet Richie in Miami.
In Miami, Donnie and Lefty plan to run Richie's club on their own and attempt to impress Florida mob boss Santo Trafficante Jr. with a yacht trip. However, Sonny Black reaches out to Trafficante first, angering Lefty, especially when Sonny Black tells Donnie to work for him and run the club as an unofficial made man. Donnie reconciles with Lefty when Lefty's son nearly dies of a drug overdose. On its opening day, Sonny Black's club is raided by Miami police on orders from Trafficante himself, who was in allegiance with Sonny Red. Suspecting the latter is responsible, the crew, without Donnie, kill Sonny Red and two rival gangsters, as well as Nicky Santora (who, Sonny Black suspects, tipped off Sonny Red about the club). With Sonny Black the new street boss, Donnie is tasked with finding and killing Sonny Red's son, Bruno.
One last dispute between Donnie and his wife becomes physical. Joseph hits his wife and is then remorseful: "I am not becoming like them, Maggie, I am them."
Knowing he will have to end his case and make arrests, Donnie tries convincing Lefty to escape his criminal life. Lefty confronts Donnie about working with the FBI. If Donnie does not kill Bruno, Lefty will kill Donnie. Before either murder can be committed, FBI agents rush in to arrest both potential killers. FBI agents reveal Donnie's true identity to Sonny Black and the crew. Lefty walks off to his implied death for letting Donnie infiltrate the gang, and Joseph is awarded with a $500 check and medal for his work.

Question: Why did the jewel thief threaten the diamond dealer?
Answer: he thinks the dealer sold Ruggiero a fake ring
Alternative answer: He sold Lefty a fake ring.