Diamond merchant Nirav Modi, who has dressed celebrities such as film stars Kate Winslet and Priyanka Chopra, has been accused of involvement in a multibillion dollar bank fraud. Modi, who grew up in a family based in Antwerp, Belgium, now faces a case under the Prevention of Money Laundering Act based on a complaint lodged by the state-run Punjab National Bank (PNB).
Modi’s home, showroom and offices in Mumbai were raided by the Enforcement Directorate on Feb.15, PTI reported. The Finance Ministry on Feb 14. said that it is taking action in this respect and the case is not “out of control.”
The Wharton dropout moved to India in his later years and founded Firestar, a diamond sourcing and trading company. Modi had left the country before PNB’s FIR, and is now in Switzerland, CNN-News 18 reported citing ED sources.
The PNB filed a complaint with law enforcement agencies, saying that it has uncovered fraudulent transactions of around Rs 11,400 crore (Rs 114 billion) in one of its branches in Mumbai. “The fraud, which began in 2011, was detected and we alerted the regulatory and law enforcement agencies,” Sunil Mehta, the managing director and CEO of the country’s second largest state-run lender, was quoted as saying by the Hindustan Times.
Modi, his wife, brother and some other members of his family, are said to have worked with bank officials to illegally obtain Letters of Undertaking, which were cashed overseas from different banks, both private and public sector. Eight Letters of Undertaking were apparently issued to the jeweler without being entered in the books.
According to the bank, Modi took help of some junior officials at the bank’s Mid Corporate Branch at Brady House, who managed to bypass PNB’s core banking system to get the letters. The letters were issued to allow buyer’s credit for making payment overseas.
The ED is raiding multiple locations in Mumbai and Delhi, including premises of Nirav Modi and Mehul Choksi of Gitanjali Gems Ltd, his home in Kurla, his jewelry boutique in Kala Ghoda area, three company locations in Bandra and Lower Parel, three premises at Surat in Gujarat, and showrooms at Chanakyapuri and Defence Colony in New Delhi.
Modi wrote to PNB asking for time for six months to repay the loan, India Today reported. He is said to be willing to pay Rs 5,000 crore.
The 48-year-old jeweler is already under the CBI scanner for a fraud worth Rs. 280 crore after a complaint filed by PNB last week. Income Tax officials raided his home and offices in Delhi, Surat and Jaipur on Jan. 31. An official from CBI had told Reuters earlier that these two cases are linked.
Modi is also being sued by actress Priyanka Chopra for lack of payment for an ad campaign done by her, reports said.
The luxury diamond jewelry designer was ranked at No. 1,234 on the Forbes’ list of world billionaires and 85 on list of India’s richest in 2017. His current net worth is estimated to be about $1.73 billion.