New York court junks Nirav Modi's plea to dismiss fraud charges
Fugitive diamond merchant Nirav Modi's attempts to get the fraud allegations against him dismissed suffered a major setback when the bankruptcy court in New York dismissed his petition.
FollowFugitive diamond merchant Nirav Modi's attempts to get the fraud allegations against him dismissed suffered a major setback when the bankruptcy court in New York dismissed his petition.Â
The fraud allegations were made by Richard Levin, who is the court-appointed trustee of three American corporations which were once indirectly owned by Nirav Modi. These corporations include Firestar Diamond, A Jaffe and Fantasy Inc.
Nirav and his associates Mihir Bhansali and Ajay Gandhi have been accused of orchestrating and carrying out a scheme to obtain loans or funds under false pretences and without collateral from numerous banks.
Levin had sued them for $15 million for 'harm suffered by their debtors' due to their extensive international fraud, money laundering and embezzlement.
The bank fraud allegedly involved the misuse of letters of undertaking. Levin claimed that Nirav and his co-conspirators artificially inflated the import volumes of his India-based companies with sham transactions so as to get more LoU funding.
The petition further accused Nirav and co-conspirators of using multiple shell companies registered in Hong Kong and Dubai to create fake import transactions and launder the proceeds.Â
In his 60-page order on Friday, Justice Sean H Lane, judge of the Southern District of New York Bankruptcy Court, ruled that Modi re-routed profits back into his own firm as additional sales to falsely inflate the stock price by setting up a scheme to defraud Punjab National Bank and others of over $1 billion.
Nirav was declared a fugitive economic offender in December 2019. He is accused of committing a Rs 14,000 crore fraud by fraudulently obtaining credit facilities from the Punjab National Bank.
The diamantaire is currently lodged in the Wandsworth prison in London from where he has challenged his extradition to India. The UK government had ordered his extradition in April.
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