Editors

Nirav Modi Case Is ‘Another Nail in the Coffin’

EditorsFeb 23, 2018

Nirav Modi Case Is ‘Another Nail in the Coffin’

A banker talks about what the billion-dollar bank fraud allegations against Indian diamantaire Nirav Modi mean for the industry as a whole.

20171110_NiravModi1.jpg
A rendering of the Nirav Modi store at the Wynn Las Vegas, which opened in November. It is one of three stores the billionaire Indian diamantaire, who is accused in a billion-dollar bank fraud, has in the United States.

You’ve likely the seen the name Nirav Modi a lot in recent years, perhaps in one of the many stories about him supplying high-profile actresses with amazing pieces to wear on the red carpet, like the earrings Yvonne Strahovski wore to the SAG Awards.  He even won an award from Town & Country earlier this year for one of his red carpet looks.

Or maybe it was in one of the stories about the opening of yet another opulent store that bears his name. There has been a Nirav Modi store on Madison Avenue in New York since 2015 but last year, the brand opened two more stores in the same month, one in the Wynn hotel in Las Vegas and the other at the Ala Moana Center in Honolulu.

More recently, however, you might have seen Modi’s name in stories of a very different sort, ones that signal that the billionaire, much like Strahovski’s character in “The Handmaid’s Tale,” could end up living a future very different from the one you might have imagined.

Last week, news broke in India that Modi and his uncle, Gitanjali Managing Director Mehul Choksi, have been accused of colluding with employees of Punjab National Bank to swindle the second-largest state-owned financial institution out of about $1.8 billion.

Here’s the story so far, according to multiple news reports on the scam, which has been making headlines in India and worldwide and has generated hashtags like #FindingNiMo, a portmanteau referencing the ongoing search for the diamantaire, who has left India.  

WATCH: The Bank Fraud Case in Five Minutes


On Jan. 29, India’s Central Bureau of Investigation (CBI) registered a case against Modi, his brother Neeshal, and Choksi.

They are accused of colluding with Punjab National Bank employees to have Letters of Understanding, or LoUs, issued to banks in Hong Kong in order to secure massive loans. LoUs are sent from one bank to another and basically say: Please loan this individual or company money for this purpose (in Modi’s case, for buying diamonds) for a specified period of time; we will be responsible for repaying you.

On the surface, there is nothing wrong or illegal about an LoU. What is problematic in this case, however, is that the LoUs were issued by PNB without proper authorization and/or oversight, and more importantly, the money was never used to pay for the diamonds.

Modi, through his attorney, has denied the allegations and hit back at the bank in a letter, claiming the amount he owes is much less, and that the publicity surrounding the case has damaged his businesses and, along with it, the bank’s ability to recover money. His businesses include Firestar International, which owns a company called Sandberg & Sikorski, better known to retailers as A. Jaffe. 

Choksi also denied his involvement through a regulatory filing made by Gitanjali, which, it is worth noting, owns Samuels Jewelers in the U.S.

I don’t want to rehash every development in this case, as it’s been widely covered by many media outlets closer to the situation with greater resources and contacts on the ground in India.

What I do want to focus on is what this case means for the diamond industry as a whole in terms of bank financing specifically; in other words, why it matters.

I spent a long time on the phone Thursday with an industry banker (who asked that his name be withheld) and asked him to help me find an apt idiom to describe this situation.

Can we say, to use a well-worn one, that this is “the straw that broke the camel’s back” when it comes to the diamond industry and financing?

No, he told me, because that camel’s already wearing a brace and taking painkillers. “This,” he said, “is just another really bad week for the camel,” or, to employ one more, it’s “just another nail in the coffin.” 

“It’s not the end of the world,” he allows. “But it is another stamp, another demerit that says, ‘Just stay away from this thing. Don’t go anywhere near it. It’s not reliable. Why would you want to do business with these people?’”

Consider cases such as M. Fabrikant & Sons, W.B. David & Co. and Winsome Diamonds, and the subsequent withdrawal of banks from the industry, one by one, like gamblers folding in a game of cards: Antwerp Diamond Bank, Bank Leumi and Standard Chartered.

Regulations have only gotten tighter, the industry hasn’t evolved enough to keep up and banks, as I wrote back in June 2016 when analyzing the exit of Standard Chartered, simply see too much risk for too little reward. 

“It's no longer a special club for men where you get to make nice to De Beers and you get your box of diamonds and everything stays behind closed doors,” the banker observed.

And yet, here we are.

The latest industry scandal will, presumably, make those few banks that are still financing the diamond industry pipeline even more vigilant and stringent about lending money, while giving those that aren’t involved another reason to stay out of it.

And it’s not going to be something the banks forget about in a year, or even five, my source said.

He said what’s going on in the industry with banks right now is a substantial change, a generational change that’s going to have effects in the short-term, yes, but also will be impacting how the diamond industry does business 30 or 40 years down the road.

“When you put bankers off of an industry, it’s going to take a while, at least a couple of decades,” to get them back on board, he said.

“Somebody has to figure out how to make these companies transparent, truly transparent, how to adopt it and how to test themselves.”

Are Consumers Following This Story?
What about consumer confidence in diamonds and the industry as a whole?

On Thursday morning, I arrived at work to find in my inbox a link to this column by Indian journalist Vinod Kuriyan, the chief editor of GEMKonnect and a highly respected colleague whom I’ve known for years.

Kuriyan linked to an article published that same day by the Times of India that indicates that the scope of the fraud extends beyond bank loans to include diamond companies in Surat setting the jewelry Modi and Choksi sold via their brands in the United Arab Emirates and Hong Kong with low-quality goods and, in some cases, man-made diamonds being sold as natural.

(The article does not say anything about any of the jewelry coming to the United States, and it is also worth noting that this Times of India article quotes an individual who said that there are no machines that can detect lab-grown diamonds once they are set in jewelry, which is incorrect.)

Kuriyan called the development a “knockout punch” as far as consumer confidence goes.

I don’t know if I’d go that far, but it will be interesting to see how this case develops in the coming weeks and months, as Mr. Kuriyan, who certainly understands the situation in India, notes that what started as a case of bank fraud is “snowballing into something much bigger.”
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

The Latest

gia-edu main image.png
Supplier BulletinSep 04, 2025
A Brilliant Future Is Here

Sponsored by GIA

Lucara pink diamond
SourcingSep 04, 2025
Lucara Unveils Unusual 37-Carat Pink Diamond

The Type IIa stone, recovered from Botswana’s Karowe diamond mine last month, features unique coloration.

A street in Carlsbad California
Events & AwardsSep 04, 2025
27 Can’t-Miss Converge Sessions, Events

From sunrise yoga to tariffs talks, these are some events to check out at the upcoming inaugural event.

japac-btyb.png
Brought to you by
Rallying Call for the Jewelry Industry on Tariffs and Other Key Issues

Jewelers of America is leading the charge to protect the industry amidst rising economic threats.

Shot from Breitling new NFL campaign
WatchesSep 04, 2025
Breitling Takes Its NFL Game to the Next Level

Breitling is now the NFL’s official timepiece partner, a move that puts the brand in front of the millions of Americans who watch football.

Weekly QuizSep 04, 2025
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
NYC Jewelry, Antique, & Object Show Autumn 2025
Events & AwardsSep 04, 2025
The NYC Jewelry, Antique, & Object Show Returns in November

NYCJAOS is set for Nov. 21-23 in New York City’s Chelsea neighborhood.

Fabergé x Gemfields Malaika Egg
SourcingSep 03, 2025
Gemfields Confirms Completion of Fabergé Sale

U.S.-based investment company SMG Capital LLC is the new owner of the luxury brand.

rio-article photo-diamond.jpg
Brought to you by
Taking the Moment Head On: How Rio Grande Champions the Present & Future of Fine Jewelry

As a leading global jewelry supplier, Rio Grande is rapidly expanding and developing new solutions to meet the needs of jewelers worldwide.

Claire’s storefront
MajorsSep 03, 2025
These Are the Nearly 300 Claire’s Stores Set to Close

A new court filing details the locations of the stores that will close, as well as the 830 that will remain open.

Stuller’s Tools, Equipment, & Metals and Findings & Metals Catalogs
MajorsSep 03, 2025
Stuller Releases 2 New Catalogs

The new catalogs are “Tools, Equipment, & Metals” and “Findings & Metals.”

Effy Jewelry Multicolor Sapphire Bangle
TrendsSep 03, 2025
Amanda’s Style File: A Perfect Birthstone

Sapphire’s variety of colors make it the perfect birthstone for September.

Woman with hands crossed wearing jewelry
FinancialsSep 02, 2025
Lab-Grown Diamonds, Lower-Priced Fashion Jewelry Drive Signet Jewelers’ Q2 Sales

The retailer has raised its guidance after seeing total sales increase 3 percent in the second quarter, beating expectations.

Jean-Christophe Bédos Birks
MajorsSep 02, 2025
Birks CEO Jean-Christophe Bédos Steps Down

Niccolò Rossi di Montelera, executive chairman of the board, was appointed as interim CEO.

Harry Winston Ginza Flagship Exterior, Interior
MajorsSep 02, 2025
Harry Winston Opens Its Largest Flagship in Japan

The three-floor space also features the jeweler’s largest VIP salon in Japan and offers an exclusive diamond pendant.

All Hours: Stephanie Gottlieb Fine Jewelry x Oak and Luna Campaign Imagery
CollectionsSep 02, 2025
Stephanie Gottlieb Debuts Silver Designs in ‘All Hours’ Collab

The collection is a collaboration between Stephanie Gottlieb Fine Jewelry and Oak and Luna, focusing on understated essentials.

Sothebys The Desert Rose orangy pink diamond collectors week
AuctionsAug 29, 2025
Sotheby’s UAE Sale to Feature 32-Carat Fancy Vivid Orangy Pink Diamond

The highlight of a single-owner jewelry and watch collection, it’s estimated to fetch up to $7 million at auction this December.

Calvin Klein watch and jewelry campaign
FinancialsAug 29, 2025
Movado’s Q2 Sales Rebound Despite Tariff Impact

CEO Efraim Grinberg noted a resurgence in the fashion watch market.

Mark Davis Bullseye Necklace
CollectionsAug 29, 2025
Piece of the Week: Mark Davis’ ‘Bullseye’ Necklace

The “Bullseye” necklace, with vintage bakelite and peridot, August’s birthstone, is the perfect transitional piece as summer turns to fall.

Image #1_Resized.png
Supplier BulletinAug 28, 2025
Clientbook Is Helping Jewelers Turn Clienteling Challenges into Wins with Hands-On Training and Coaching

Sponsored by Clientbook

GIA’s new report for lab-grown diamonds
GradingAug 28, 2025
GIA’s New ‘Quality Assessment’ for Lab-Grown Diamonds Is Coming

It will classify lab-grown stones into one of two categories, “premium” or “standard,” in lieu of giving specific color and clarity grades.

Botswana President Duma Boko
SourcingAug 28, 2025
Botswana Declares Public Health Emergency Amid Diamond Sales Slump

President Duma Boko addressed the country’s medical supply chain crisis in a recent televised address.

Afton Robertson-Kanne Borsheims
MajorsAug 28, 2025
Borsheims Names New Jewelry Buyer

Former Free People buyer Afton Robertson-Kanne recently joined the retailer.

Sissy’s Log Cabin Back to School and Bling
IndependentsAug 28, 2025
Sissy’s Log Cabin Donates School Supplies to Memphis Students

The jeweler teamed up with two local organizations for its inaugural “Back to School and Bling” event.

11,685-carat Imboo emerald
SourcingAug 27, 2025
11,685-Carat Emerald Recovered From Zambia’s Kagem Mine

Dubbed the “Imboo,” or “buffalo,” emerald, the rough gemstone is part of Gemfields’ latest emerald auction, which is taking place now.

Shopping cart
SurveysAug 27, 2025
Consumer Confidence Slips in August Amid Job, Income Worries

Plans for dining out, booking vacations, and buying big-ticket items were down.

Mine + Found Play Collection Prize Bubble Locket, Whistle Pendent, Fortune Dice
CollectionsAug 27, 2025
Mined + Found’s New Collection Gets Playful

The “Play” collection centers on nostalgic toys that have kinetic elements to carry playfulness and wonder into adulthood.

CCWW lifesaver necklace
CollectionsAug 26, 2025
Does Your Jewelry Stack Need a Snack?

Designer Christina Puchi, the creative force behind CCWW Designs, has created charms and pendants based on iconic candies and crackers.

×

This site uses cookies to give you the best online experience. By continuing to use & browse this site, we assume you agree to our Privacy Policy