Months before PNB scam blew up, Nirav Modi bought property in New York
Three American firms indirectly controlled by Nirav Modi may have used money made from the Punjab National Bank scam to help finalise the purchase of two apartments in New York for the diamond merchant’s wife and family, just months before the scandal became public in India.
These findings, and more, of how Nirav Modi’s operations in the US helped put together the massive Rs 135 billion bank fraud come from a bankruptcy examiner report submitted this week to the United States Bankruptcy Court in the Southern District of New York.
The three companies in question – Firestar Diamond Inc (FDI), A Jaffe Inc and Fantasy Inc – filed for Chapter 11 bankruptcy protection in the US after the scandal came to light in India in late January 2018.
However, the New York court appointed an examiner (John J Carney) to determine “the extent, if any, of the Modi conspirator’s influence on the debtors [the three American firms]”.
There appears to be “substantial evidence to support the knowledge and involvement by the debtors, and their senior officers and directors, namely Mihir Bhansali and Ajay Gandhi, in the criminal conduct alleged by Indian authorities”, the examiner concluded.
In particular, the report notes that Ajay Gandhi, who has denied all allegations, apparently assisted Nirav Modi in using the American firms’ funds in “connection with large real estate purchases shortly before the fraud charges were brought in India [emphasis added].”
Also, money from what the bankruptcy examiner calls “shadow entities’ – a group of Middle Eastern and East Asian shell companies that were used for round-tripping as part of the letter of undertaking (LoU) fraud – was used to “purchase an approximately $6 million apartment on Central Park South for the sole use of Modi and his family in the US”
“Gandhi assisted Modi by paying approximately $3 million from FDI to pay off an HSBC mortgage to transfer an apartment valued at approximately $6 million from a Firestar affiliate to a trust established by his sister for the benefit of Modi and his family,” the report notes.