US court rejects plea to dismiss allegations against Nirav Modi

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 50-year-old Modi previously.

Levin had also sought a minimum compensation of $15 million for the “harm” suffered by the debtors of Nirav 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. 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 60-page 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 $1 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.

“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 based on the court papers