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Nehal Modi Convicted of Grand Larceny

Jul 13, 2022 12:11 PM   By Rapaport News
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RAPAPORT... The New York State Supreme Court has convicted diamond dealer Nehal Modi of grand larceny in the first degree, concluding that the brother of infamous tycoon Nirav obtained more than $2.6 million in goods through fraud.

The Antwerp-based former Samuels Jewelers CEO made false claims to LLD Diamonds to secure merchandise, Manhattan District Attorney Alvin Bragg, Jr., said in a statement last week. On multiple occasions in 2015, Modi claimed he had a deal with Costco Wholesale Corporation, but ended up liquidating the diamonds for personal gain, the statement said.

“This scheme unfolded in the heart of New York City’s historic diamond district, where Mr. Modi conned and defrauded a Manhattan business out of millions,” said Bragg. “Here, there was clear and conclusive evidence that Mr. Modi obtained these diamonds under false pretenses and used them for quick cash.”

In March 2015, Modi asked LLD to provide diamonds worth nearly $800,000 so he could present them to Costco. After receiving the merchandise, Modi falsely told the seller that the warehouse retailer had agreed to buy them. Based on that, LLD allowed Modi to acquire them on payment terms of 90 days. Modi pawned the diamonds the next day at Modell Collateral Loans for $450,000, according to the statement.

Between April and May 2015, Modi, 41, went back three times to LLD and obtained more than $1 million worth of diamonds, again claiming he would sell them to Costco, the district attorney continued. He used the proceeds for personal use and other business expenses. He lied about encountering “payment issues” due to a “Costco fulfillment error,” the statement noted.

In August 2015, Modi — now with an outstanding balance of nearly $1 million — went to LLD again to buy diamonds. This time, LLD supplied product on consignment in return for a partial upfront payment and with terms stating that Modi could only sell the diamonds with authorization from LLD.

Modi, the district attorney said, had already contacted Modell to arrange the pawn of LLD’s diamonds before he had even received them. He proceeded to pawn most of the stones the same day for approximately $300,000 and sold the remainder of the diamonds to various retailers at “large discounts” from LLD’s consignment price, the statement said.

“LLD ultimately uncovered the fraud and demanded that Modi immediately pay his outstanding balance or return the diamonds,” Bragg said. “However, the defendant had already sold or pawned all the diamonds and had spent most of those proceeds.” LLD reported the fraud to the Manhattan district attorney’s office.

Modi will appeal the conviction, his lawyer, Roger Bernstein, told Rapaport News Wednesday. The jury deliberated for more than a day before reaching the guilty verdict, he said. Sentencing is scheduled for July 22.

“During the applicable time period in the spring and summer of 2015, Modi paid LLD approximately $1 million against overall purchases of $2.6 million,” Bernstein said. “Fewer than half of the diamonds Modi purchased were pledged as collateral for loans, which is an accepted industry practice. Moreover, only a portion of the pledged diamonds were not foreclosed; for a substantial number, the loans were redeemed by Modi.”

Bernstein also noted that charges were not filed until November 2020.

“When Modi was unable to make the remaining payments due to LLD, LLD sought payment from its insurer on transactions it called ‘memo’ transactions,” he said. “When the insurer rejected LLD’s so-called ‘memo’ claim, LLD went to the district attorney’s office.”

Image: Nehal Modi. (Nehal Modi/LinkedIn)
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Tags: Alvin Bragg, Costco, Costco Wholesale Corporation, crime, fraud, Grand Larceny, LLD Diamonds, manhattan, Manhattan District Attorney, Modell Collateral Loans, Nehal Modi, new york, Nirav Modi, Rapaport News, samuels, samuels jewelers, York State Supreme Court
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