Daily fraud update: 13th May

Chris Lee
Hand above toy blocks which read the word FRAUD

Nirav Modi case: allegations of conspiracy with forex manager

A man who stands accused of using low-quality jewellery to carry out bank fraud is now also dealing with allegations of conspiring with a forex official at a bank.

Nirav Modi is a jeweller who is undergoing an extradition hearing in London over claims that he defrauded the Punjab National Bank.

He is accused of having conned the bank out of a sum equivalent to over $1bn.

He is accused of carrying out this scam by using what are known as “letters of undertaking”.

He allegedly managed to do this by “rotating” low-quality jewellery around a series of dummy firms that he owned.

The alleged aim of doing this was to move money into bank accounts owned by Modi or his family.

According to a press report, Modi worked alongside a person named Gokulnath Shetty in order to do this.

Shetty formerly served as a deputy manager at the bank’s foreign exchange department.

In court, lawyer Helen Malcolm, who represents the British government’s prosecution arm, read out a list of allegations.

“The papers fall into fraud, money-laundering and the rotation of goods around the Modi empire of companies in a fairly dismal round of exports and imports all linked to companies of which Nirav Modi is ultimately in control,” she said.

“Goods circulated in a dizzying motion and yet the jewellery circulated was of poor quality. This was a way of getting funds into the Modi family coffers and boost other Modi enterprises. This is evidence of the fraudulent character of Modi,” she added.

She also went on to give some more details about the alleged fraud and how it operated.

She said that it had the hallmarks of a Ponzi scheme set up to dupe investors.

“In large part it was a circular Ponzi scheme of borrowing,” she said.

“The diamonds were not studded on the jewellery but glued on for easy rotation. Dubai would, for example, send pearls to four or five Modi companies in Hong Kong; there they would increase their value and then export them again,” she explained.

She also went on to argue that it seemed implausible for a bank to actually take on the sort of risk in question.

“The sums are so huge that it is difficult to see how any bank would take the risk of billion dollars of unsecured debt,” she said.

“This was not authorised and Mr Modi had been challenged to provide a loan agreement and has not,” she added.

The current hearing is an extradition-related one only, and will determine whether or not Modi will be moved to India.

Modi, who was born in 1971, was arrested in 2019 in the London district of Holborn.

The Indian government is attempting to have him extradited to face charges at home.

He is understood to have first moved to London in 2018.

 


Chris Lee

Latest news

Forex vs Crypto: What’s Better For Beginner Traders?
The crypto and forex markets are two of the world’s most popular among investors and traders. Read more
Three Great Technical Analysis Tools for Forex Trading
You don’t have to be very technical minded to make use of technical analysis in your forex trading. Read more

Safest Forex Brokers 2024

Broker Info Best In Customer Satisfaction Score
#1 Blackbull LogoYour capital is at risk Founded: 2014 Global Forex Broker
Number One Broker
BEST SPREADS Visit broker
4.8
#2 AvaTrade LogoYour capital is at risk Founded: 2006 Globally regulated broker
Number One Broker
BEST CUSTOMER SUPPORT Visit broker
4.9
#3 * 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money Founded: 2008 Global CFD Provider
Number One Broker
Best Trading App Visit broker
5
#4 Between 74-89 % of retail investor accounts lose money when trading CFDs Founded: 2010 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
4.9
#5 Forex Broker eToro Logo76% of CFD traders lose money Founded: 2007 Global CFD & FX Broker
Number One Broker
ALL-INCLUSIVE TRADING PLATFORM Visit broker
4.9
#6 XM LogoYour capital is at risk Founded: 2009, 2015 and 2017 Global Forex Broker
Number One Broker
Low minimum deposit Visit broker
5
#7 FxPro LogoYour capital is at risk Founded: 2006 CFD and Cryptocurrency Broker
Number One Broker
CFD and Cryptocurrency Visit broker
5

    Forex Fraud Certified Brokers

    FxPro logo
    FXTM Logo
    AvaTrade logo
    eToro Logo
    XM Logo
    BlackBull Logo Small
    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.