In a major blow to Nirav Modi, a bankruptcy court in the US has rejected a petition of the fugitive diamond merchant and two of his associates, seeking dismissal of fraud allegations against them by the trustee of three companies they previously owned indirectly.
The allegations were made in a New York court by Richard Levin, the court appointed trustee of three US corporations - Firestar Diamond, Fantasy Inc and A Jaffe - indirectly owned by Modi previously. Levin had also sought a minimum compensation of USD15 million for the “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, in a major blow to the Indian fugitive and his accomplices. Nirav Modi, who is currently lodged in a jail in the UK, is challenging India’s attempts to extradite him to face charges of fraud and money laundering in the Punjab National Bank (PNB) scam case.
“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 said. Explaining the order, Batra said Modi outdid Crazy Eddie (Eddie Antar), the founder of an American electronics retail chain, who 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 PNB and other banks of over USD1 billion by a “shell game,” where the ball gets bigger with each sleight of hand, and then issue Letters of Undertaking (sort of a guarantee) to PNB and get loans based upon the inflated ball’s value.
According to the court order, Levin’s petition sought to recover damages for harm inflicted by Modi and his two accomplices on the debtors and their estates as a result of his six-year extensive international fraud, money laundering and embezzlement scheme.
