Indian gem dealer busted in alleged $1.4M diamond fraud

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A gem dealer from a prominent family was busted Friday for allegedly stealing $1.4 million in diamonds from a New York wholesaler.

“While diamonds may be forever, this flawed scheme was not, and now Mr. Modi will face the clarity of a New York Supreme Court indictment,” said Manhattan District Attorney Cy Vance Jr. in a statement, referring to defendant Nehal Modi.

The 41-year-old pleaded not guilty Friday to one count of first-degree grand larceny in Manhattan Supreme Court. He was released without bail.

He faces more serious charges in India for allegedly laundering more than $100 million for his billionaire jeweler brother, Nirav Modi, whose designs have been worn by model Rosie Huntington-Whiteley and actresses Naomi Watts and Kate Winslet, according to the BBC. Bollywood star Priyanka Chopra-Jonas has graced billboards advertising the brand.

Nehal Modi allegedly persuaded LLD Diamonds USA to front him $2.6 million in gems for a purported deal with Costco in 2015.

Instead, he allegedly took $1.4 million worth of the sparklers and sold them at a steep discount, pawned them for cash and used them to secure loans to fuel his international playboy lifestyle, according to court papers and prosecutors.

Nehal Modi paid back about $1.2 million to Diamonds LLD. But when the company president asked about the outstanding balance, he stalled, falsely claiming there had been a “Costco fulfillment error,” prosecutors charge. Diamonds LLD reported the alleged scam to the DA’s office.

“This is a commercial dispute,” said Modi’s defense lawyer Roger Bernstein. “Mr. Modi is not guilty.”

The company trusted Nehal Modi as he was “well-known in the industry and came from a wealthy family that owned and operated several diamond companies,” prosecutors wrote in court papers.

But just a few years later, the Modi family name would be tarnished by scandal.

Nirav Modi, 49, was arrested in London last year for his alleged role in a $2 billion bank fraud in India — the largest in the country’s history, the BBC reported.

Indian authorities issued an Interpol notice for Nehal Modi’s arrest in May for alleged money laundering and destruction of evidence in connection to the scheme, according to India Today.

It wasn’t immediately clear why Nehal Modi wasn’t taken into custody on the Interpol warrant.

His brother Nishal Modi and sister Purvi Modi are also implicated in the bank fraud, the news site reported.

Source : Indian gem dealer busted in alleged $1.4M diamond fraud