How Nirav Modi used diamonds to pull off bank scam

The three-carat gem was shipped between shadowy companies at least four times in 2011.

After seven months of the revelation has come to light that Nirav Modi's modus operandi in the scam was cleverer than anticipated.
According to Bloomberg, which cites a US Bankruptcy examiner report, suggested that Nirav Modi secured Letters of Undertaking (LoU) from PNB in lieu of receipts he collected from round-tripping of diamonds.
The report from US bankruptcy examiner claimed, the three-carat gem was shipped between shadowy companies at least four times in 2011, allegedly controlled by Nirav Modi about five weeks.
John J. Carney, the examiner of bankruptcy case of three US jewellery company which was owned by Nirav Modi indirectly, wrote, " The rapid-fire sales were a part of plan in which Nirav Modi and his associates fraudulently borrowed  approximately $4 billion over a period of years by manufacturing sham transactions purportedly to ' import' diamonds and other gems into India using a web of more than 20 secretly controlled shell entities."
Modi has previously denied wrongdoing, and a lawyer representing him declined to comment Monday on the examiner's report.
In February, when the celebrity jeweller was vividly exposed in Newark, the firms sought protection from the creditors. Nirav Modi and his alleged co-conspirator were accused by the authority. Though he denied confessing anything about his fraud activities, he was announced as an international fugitive.
Firestar Diamond Inc, a US company owned by Nirav Modi, first sold the " fancy vivid yellow-orange cushion cut " diamond and shipped to Fancy Creations Company Ltd in August of 2011, a foreign shell company also allegedly controlled by Nirav Modi in Hong Kong. According to the report, the price of this diamond price is around $1.1 million.
The companies exported diamonds via FedEx instead of with a bonded courier - including a 17-carat stone sold for $1.7 million and sent from New York City to Hong Kong - even though FedEx insures packages only up to $150,000, the report states.
Solar Export, a partnership family trust by Nirav Modi shipped out this stone two weeks later and it returned to the Firestar Diamond in the US. The real worth of this gem was then $183, 000 according to the examiner.
After almost one week later, Firestar on the Fifth Avenue of New York city shipped the diamond and it returned to the Fancy Creations in Hong Kong. According to the report this time, it was of $1.6 million.
"There is no legitimate business reason to ship diamonds worth millions of dollars without obtaining appropriate insurance," Carney wrote, citing a gem expert retained by the bankruptcy trustee.
The report found "substantial evidence" to back up Indian criminal and civil authorities who say Modi's US companies and senior officials were involved in transactions related to alleged bank fraud and money laundering.
 

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