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Who is Nehal Modi, arrested in US? His loan-and-pawn diamond fraud runs wide
Nirav Modi's brother Nehal is no stranger to fraud cases of diamonds obtained on false promises to raise loans, and then splurge – and not in India alone
Fugitive diamond merchant Nirav Modi’s younger brother, Nehal Modi, who is also named in fraud cases in India, has been arrested in the US, reportedly on an extradition request by Indian agencies.
Nehal, 46, who is part of the family's global diamond business, is wanted by India's Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI). He allegedly assisted his brother in diversion of funds from what's known as the ‘PNB loan scam’, worth thousands of crores of fraudulently obtained loans from the Punjab National Bank.
Reports show Nehal, a Belgian national, had an Interpol red notice against him some years ago. The latest search on the Interpol website does not show up his name.
His brother Nirav Modi, 54, is listed there. He is in jail in the UK since March 2019 when he was arrested on an extradition warrant. Nirav has managed to stall India's attempts to get him to the country so far.
Was convicted in New York, similar scam
Nehal, however, is no stranger to fraud charges or even convictions – and not in India alone. A New York court had convicted him in 2020 (upheld in 2023) for fraudulently obtaining diamonds worth over $2.6 million from LLD Diamonds USA, one of the world’s largest diamond companies.
The attorney's office in New York detailed that case, though it was not immediately clear if he served the sentence.
In 2015, Nehal managed to obtain diamonds worth over 2.6 million dollars from LLD on favourable credit terms by making false representations and then sold the diamonds for money he used for personal ends, it said.
Also read: London court stops sale of Nirav Modi’s duplex apartment
It was in 2019 that Interpol had issued a Red Corner Notice against Nehal Modi as he was named in the chargesheet filed by the Enforcement Directorate in the PNB scam in which his brother Nirav Modi is the main accused. Nehal had allegedly helped Nirav in diverting money to shell corporations, HT reported.
In the US case, too, modus operandi was not very different from the Modi brothers' PNB scam.
US attorney said this about Nehal
Nehal Modi had told LLD Diamonds USA in 2015 that he was in talks with wholesale major Costco who wanted to buy the diamonds for further retail sale.
“Nehal falsely informed LLD that Cotsco agreed to purchase the diamonds following which LLD allowed him to purchase those on credit. Full payment was required within 90 days. But Nehal mortgaged the diamonds to secure short-term loans. In the meantime, he made some payments to LLD but the majority of the proceeds were used for personal expenses,” as per the case.
By the time LLD demanded that he pay up immediately, had already sold or pawned all of the diamonds and spent most of those proceeds, following which the company reported the fraud to the Manhattan district attorney.
He is also among people named in Nirav Modi and family's bankruptcy proceedings in the US. As for Nehal's immediate family, reliable information is not available.
What happens next?
Now that Nehal Modi is in custody in the US, the next date for the hearing in the matter of his arrest and possible extradition is July 17, when he can seek bail, Deccan Herald reported.
“While diamonds maybe forever, this flawed scheme was not," the Manhattan DA had said about the LLD Diamonds case.
The ED and CBI will now have to make a case for his extradition in US courts. His being a Belgian national is a possible factor in play too.
