Nehal Modi, a brother of PNB fraud-accused jeweller Nirav Modi and also wanted by the CBI in the same case, has been charged in the United States with defrauding a company of over $1 million worth in diamonds.
Mr Modi allegedly made "false representations" to obtain more than $2.6 million worth of the gems from LLD Diamonds USA on favorable credit terms and consignment, and then liquidated them for his own ends, according to a December 18 statement from the office of the Manhattan District Attorney, Cy Vance Junior. While he did make some payments to LLD towards the diamonds, he used most of the proceeds from their liquidation for personal use, the statement said.
"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," Cy Vance Junior said in the statement on Friday.
Mr Modi, a resident of Antwerp, is the brother Nirav Modi, the Belgian diamond trader who was formerly Indian, known for his role in one of India's biggest bank fraud cases in recent years in which he allegedly swindled $2 billion from Punjab National Bank. Nehal Modi himself is wanted by the CBI in a case related to the PNB fraud, in which he is accused number 27 and charged with destroying evidence in Dubai to cover the tracks of the alleged crime.
Announcing Nehal Modi's indictment, the statement from the District Attorney's office said the accused had approached LLD claiming he was pursuing a relationship with Costco Wholesale Corporation and sought diamonds worth nearly $800,000 to present to Costco for a potential sale.
Later he lied to LLD that Costco had agreed to the deal and purchased the diamonds on credit from LLD. However, Mr Modi then pawned the diamonds to secure a short-term loan, the statement said.
"Between April and May 2015, Modi returned to LLD three additional times and took more than $1 million worth of diamonds for purported sales to Costco. Modi made a series of payments to LLD, but used the majority of the proceeds for personal use and other business expenses. To cover his fraud, Modi falsely claimed that he was encountering payment issues due to a 'Costco fulfillment error' and made repeated promises to satisfy the balance," the statement said.
LLD finally realised the fraud and demanded an immediate payment of the balance or return of the diamonds. However, Mr Modi had already sold or pawned all of them and spent most of the proceeds. LLD subsequently reported the fraud to the Manhattan District Attorney's Office.
The New York Supreme Court has now indicted him with grand larceny in the first degree.