Nirav Modi’s firms are ‘not mere victims’ but, ‘active participants’ in fraud: PNB

New Delhi: Punjab National Bank (PNB) has told a US bankruptcy court that it suspects Nirav Modi controlled US firms Firestar Diamond, Fantasy and A Jaffe are not mere victims of circumstance but instead ‘active participants’ in the massive billion-dollar fraud perpetrated over seven years by Modi and his uncle Mehul Choksi.

Active participation in the fraud could mean that Modi’s US firms played a key role in the flow of money linked to India’s largest banking fraud case and some company executives knowingly used the firm structures to help Modi take out money from PNB to America.

About two weeks ago, Nirav Modi aides Mihir Bhansali and Rakhi Bhansali moved the US court, seeking quashing of PNB’s subpoenas issued to the husband-wife duo.

The PNB subpoenas had compelled them to share information via depositions, and also to comply with as many as 60 document requests.

On 22 August, US attorneys for PNB in response to Bhansali’s action submitted to the US court, “From the beginning of this case, PNB suspected that the debtors (Firestar, Fantasy and Jaffe) were not mere victims of circumstance but were instead active participants in the fraud – suspicion that was vindicated by Mihir Bhansali’s abrupt resignation and invocation of his Fifth Amendment right against self-incrimination.”

The Fifth Amendment right basically in this context means that individuals cannot be compelled to testify against themselves.

Shortly after it emerged that Modi and Choksi defrauded PNB to the tune of $2 billion, Modi’s US firms quickly filed for bankruptcy in America.

Firestar Diamond’s sole director at the time of bankruptcy filing was Mihir Bhansali, and he later resigned under mysterious circumstances.

PNB also said his wife, Rakhi Bhansali, has her own connections with the Modi empire, having served as director of several entities controlled by Modi, and also having been the recipient of valuable real estate property interest in a suspicious transaction occurring only two days after the petition date (bankruptcy filing).

Mihir Bhansali is a past director of Firestar Diamond International Pvt Ltd, a company he incorporated with Nirav Modi. Mihir was also a former director of Firestar International, another affiliate of Modi.

Rakhi has been listed as the director of at least three entities affiliated with Modi, and incorporated at least two of the entities.

According to PNB, Mihir has been identified as a manager of Central Park Real Estate LLC (CPRE), a wholly owned subsidiary of Firestar International, which purchased a condominium apartment in Manhattan for around $5 million.

Also, Mihir and his wife allegedly purchased an apartment in New York City for approximately $7 million on March 22, 2017, of which approximately $5.3 million was paid in cash.