US court dismisses plea filed by Nirav Modi, associates

Washington, October 19

A bankruptcy court in New York has dismissed a petition of fugitive diamond merchant Nirav Modi and his associates, seeking dismissal of fraud allegations against them.

The allegations were made by Richard Levin, the court-appointed trustee of three US corporations - Firestar Diamond, Fantasy Inc and A Jaffe -indirectly owned by Nirav Modi previously.

Levin had also sought a minimum compensation of USD 15 million for “harm” suffered by the debtors of Modi and his associates Mihir Bhansali and Ajay Gandhi.

Southern District of New York Bankruptcy Court Judge Sean H Lane issued the order last Friday, in a major blow to the Indian fugitive and his accomplices.

“SDNY Bankruptcy Court Judge Lane in a clear decision denied defendants Modi, Bansali and Gandhi's motions to dismiss US Trustee Richard Levin's amended complaint in the adversary proceeding arising out of Modi's initial chapter 11 bankruptcy petition, alleging fraud, breach of fiduciary duties, RICO and related state law claims,” Indian American attorney Ravi Batra told PTI.

Explaining the 60-page order, Batra said Modi ploughed his profits back into his own company as additional sales to falsely raise the stock price/company valuation by setting up a scheme to defraud Punjab National Bank and others of over USD1 billion. 

“But to get the ill-gotten funds by bank fraud out of his companies, he engaged in a separate fraud to hide those withdrawals for personal benefit as if they were ordinary business transactions,” Batra said.

According to the court order, Levin's petition sought to recover damages for harm inflicted by Modi and his two accomplishes on the debtors and their estates as a result of the his six-year extensive international fraud, money laundering and embezzlement scheme. 

It said from early 2011 to early 2018, Modi and his associates orchestrated and carried out a scheme to “obtain loans, credits or other funds under false pretences and without collateral” from numerous banks, including the PNB. PTI