A bankruptcy court in New York has dismissed a plea by fugitive diamond merchant Nirav Modi and his associates, seeking to drop the fraud charges against them.

The allegations were leveled by Richard Levine, the court appointed trustees of three US corporations – Firestar Diamond, Fantasy Inc and A Jaffa – indirectly owned by Nirav Modi.

Levin had also sought a minimum compensation of USD 1.5 million for the “losses” caused to the borrowers of Modi and his aides Mihir Bhansali and Ajay Gandhi.

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

“SDNY Bankruptcy Court Judge Lane in a clear judgment dismissed the motions of defendants Modi, Bansali and Gandhi, dismissing the amended complaint of US Trustee Richard Levine in adverse proceedings arising out of Modi’s initial Chapter 11 bankruptcy petition was charged with fraud, breach of fiduciary duties, and Ricoh. claim to the relevant state law,” Indian American lawyer Ravi Batra reported.

Elaborating on the 60-page order, Batra said Modi had falsely inflated the stock price/valuation of the company by setting up a scheme to defraud Punjab National Bank and others to the tune of over USD 1 billion. Took his profits back to his company in the form of additional sales.


Batra said, “But in order to get money wrongly received from their companies by bank fraud, they indulged in a separate fraud to hide those withdrawals for personal gain, as if they were normal business transactions, said Batra.

According to the court order, Levin’s petition sought damages to Modi and two of his achievements for damages caused to debtors and their estates as a result of their six-year extensive international fraud, money laundering and embezzlement scheme.

It said that from early 2011 to early 2018, Modi and his associates devised and executed a plan to “obtain loans, credit or other funds under false pretense and without collateral” from several banks, including PNB.

The bank fraud involved the use of Letters of Undertaking (LoU), a financial instrument unique to India, designed to facilitate efficient import transactions.

It alleged that Modi and his co-conspirators tried to artificially increase the volume of imports of Modi’s India-based companies with fake transactions, in order to obtain more LoU funding. To execute this plan, Modi and his co-conspirators used a web of shell companies known as “shadow entities” based in Hong Kong and Dubai to create fake import transactions and launder the proceeds. appeared as legitimate businesses.