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Nirav Modi’s Brother Indicted in Diamond Fraud
Dec 20, 2020 11:04 AM
By Rapaport News
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RAPAPORT... Indian dealer Nehal Modi was charged Friday with grand larceny for allegedly stealing $1.4 million in diamonds from a New York wholesaler in a multipart scam.
In March 2015, Modi — the brother of infamous Indian jeweler Nirav Modi — borrowed nearly $800,000 worth of diamonds from LLD Diamonds for a purported deal with Costco, prosecutors said Friday in a court filing. However, instead of selling those diamonds to Costco, Modi pawned them for a short-term loan, according to the document.
Modi allegedly returned to LLD three times between April and May 2015, and took approximately $1.1 million in diamonds he said were for sale to Costco. He paid back some of the funds owed to LLD, but spent the majority on personal items, the prosecution noted. Modi purportedly told the wholesaler the rest of the payments were late due to a “Costco fulfillment error,” and promised to pay the rest back soon.
In August 2015, Modi told LLD that Costco wanted to buy additional diamonds, the court documents claimed. LLD loaned further diamonds to Modi on memo, meaning he was not allowed to sell them without gaining approval from LLD first. After picking up the diamonds from LLD, Modi allegedly pawned most of them for loans totaling $250,000. He sold the remainder to New York-based retailers at a steep discount from the price listed on the memo agreements. Of the $2.6 million Modi borrowed from LLD, only about $1.2 million has been repaid, the court observed.
“As alleged, Mr. Modi conned a Manhattan diamond wholesaler into fronting him millions worth of diamonds for a purported deal with Costco that never existed,” said Manhattan district attorney Cyrus Vance. “While diamonds may be forever, this flawed scheme was not, and now Mr. Modi will face the clarity of a New York Supreme Court indictment.”
Nehal Modi also reportedly faces charges in India, where he is wanted by the country’s Central Bureau of Investigation in connection with his brother’s alleged $2 billion fraud of Punjab National Bank in 2018, the largest in Indian history.
Nirav Modi was arrested in relation to that case in London early last year. Nehal Modi was released on condition that he committed to appearing at court in February, the District Attorney’s Office said.
“This is a commercial dispute,” Nehal Modi’s lawyer, Roger Bernstein, told Rapaport News Sunday. “The district attorney’s charges are only allegations. The underlying facts will be shown in court.”
Image: Nehal Modi. (Nehal Modi/LinkedIn)
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Tags:
Costco, Cy Vance, Diamond Fraud, LLD Diamonds, Nehal Modi, New York Supreme Court, Nirav Modi, Rapaport News, Roger Bernstein
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