Doug,
If the watch is that accessible to you, can you tell him you'd like to photograph it and post the picture on this message Board, (even if you don't happen to own a digital camera or a scanner)? If the watch is a fraud, that'd likely smoke him out! Of course, there is a danger he might call your bluff if he really thinks it's real. Or you might ask him to accompany you to a local gemmologist for an opinion on the "diamonds". Ask him for its pedigree (registration, warranty, receipt from a legitimate dealer showing the serial number). You'll scare him off, which is not necessarily a bad thing.
Sure don't sound anything like any bonafide Rolex I ever saw!
Doug