Nehal Modi, the brother of the fugitive jewelry retailer Nirav Modi, was charged by a New York City Attorney with alleged $ 2.6 million fraud carried out as part of a multi-tiered program designed to defraud one of the largest diamond companies in the world .
Prosecutor Cy Vance announced the charges against Nehal Modi on Friday, saying, “While diamonds may have been forever, this flawed scheme was not, and now Mr. Modi will face the clarity of a New York Supreme Court indictment.”
Modi has been charged with “grand first degree theft” in federal Supreme Court for allegedly “fraudulently obtaining over $ 2.6 million worth of diamonds from a Manhattan-based diamond wholesale company,” said Vance, the borough’s attorney Manhattan .
The crime of grand theft in the first degree under New York State law is over $ 1 million theft with a maximum sentence of 25 years in prison.
According to the New York Post, Modi told the court he was not guilty of charges and was released without bail.
In a short video on the Post website, Modi is seen walking in the corridor of a courthouse with a man who may be his lawyer. When asked about the case, he replied, “There is nothing about the case.”
When asked about the Interpol announcement, the man accompanying him said: “We are not discussing the case, I told you that.”
Nehal Modi is wanted in India in connection with an alleged 13,500 rupee (approximately $ 1.9 billion) fraud involving the Punjab National Bank. At the request of India, Interpol has issued a red notice calling on law enforcement agencies worldwide to be arrested pending extradition.
During the New York trial, prosecutors first brought the case to a large jury – a group of citizens – to determine if it was a prima facie case in order to proceed with the prosecution. The grand jury indicted him – a finding that there were ample grounds to indict him.
The alleged crime dates back to 2015 when Nehal Modi asked a company identified as LLD Diamonds USA to obtain over $ 2.6 million in “misrepresentation” diamonds, some of which he pledged for loans and received the remainder sold as sharply reduced prices said in a statement.
LLD Diamonds states on its website that it is “the world’s largest privately owned diamond manufacturer and cutting company – completely independent of outside suppliers, with its own widely distributed sources of raw materials from mine owners around the world”.
Prosecutors said that Modi first asked the company in March 2015 to give him approximately $ 8.00,000 worth of diamonds that were supposed to be reported for potential sale to a company called Costco Wholesale Corporation, a chain that gives its customers discounts as members.
Modi then claimed Costco agreed to buy the diamonds and LLD gave them to him on credit to pay for them within 90 days, prosecutors said.
But he mortgaged the diamonds on a short-term loan to another company and returned to LLD for more $ 1 million worth of diamonds. According to prosecutors, Costco had agreed to buy it.
He made some payments to LLD, but used most of the proceeds for business and personal expenses. To “cover his fraud,” Modi falsely claimed he had payment problems due to a “Costco compliance failure,” prosecutors said.
In August, Modi returned to LLD “with the false claim” that Costco wanted to buy more diamonds and after picking them up he pawned some of them and sold the remainder at a “high discount” to retailers, according to prosecutors.
By the time LLD discovered the fraud and requested payment or return of the diamonds, Modi had already pawned or sold all of the gems and spent most of the money, prosecutors said.
LLD then filed a complaint with the Manhattan Attorney’s Office.
Vance asked others who might be “victims of this type of theft” to call the financial fraud hotline in his office.