The Nirav Modi Case: What Else We Learned This Week

Kong company called Firestar Holdings Ltd., which is a wholly owned subsidiary of an Indian company called Firestar International Ltd., of which Nirav Modi is “directly or indirectly” the majority shareholder, the affidavit states.  

A. Jaffe Inc., meanwhile, is 95 percent owned by Synergies, with founder Sam Sandberg holding the remaining 5 percent.

Do you need an Advil now? If so, feel free to grab a couple. I’ll wait.

Now, remember that conversation I reported on last week with the banker, in which he talked about how bankers are put off by the industry’s lack of transparency? This “spaghetti junction” of organization, as another industry insider described it, is exactly what he was talking about. 

Why Chapter 11?
There’s a section of the affidavit titled “Events Leading to the Chapter 11 filing” that, after running down the allegations against Modi, points to the same factor that Winters mentioned to me on the phone Tuesday when I was interviewing him about the bankruptcy filing.

Modi’s factories in India that made most of the jewelry for Firestar Diamond, Fantasy Inc. and A. Jaffe were seized and shut down, which, the affidavit points out, resulted in thousands of people losing their jobs. The Indian entities also provided Firestar/Fantasy and A. Jaffe with back office and support functions.

That’s a sad reality of situations like this—that everyday working people lose their livelihoods because of the ego and greed (or, in this case still, alleged greed) of big corporations or individuals—and it shouldn’t be forgotten.

It’s also worth noting that job losses are what the principals of Firestar/Fantasy and A. Jaffe are trying to prevent from happening in the United States.  

Chapter 11 gives these three companies a chance to reorganize either with new owners or investors, provided they can find some who are willing and also can navigate the legalities of selling companies that are connected to an alleged, international white-collar crime.

Firestar Diamond International and Fantasy Inc. do about $90 million in sales a year, according to the affidavit, selling to big companies like Signet-owned Zales, Kay Jewelers, and Jared the Galleria of Jewelry, as well as Costco, Sam’s Club, Walmart and J.C. Penney. The company also holds the IP for the Endless Diamond brand.

A. Jaffe’s market is more upscale—it sells to “hundreds of the finest independent jewelry stores in America,” the affidavit states—and the company has been growing steadily over the past three years, with fiscal 2018 sales projected to reach $23 million.

Both businesses are looking for a buyer, and the affidavit told me the same thing that Winters did on the phone earlier this week: that “early expressions of interests” have been “strong.”

What About the Nirav Modi Stores?
This is not something that was included in the affidavit and is not connected to any of the three companies above, but I do want to talk a little bit about what we know about Modi’s stores in the U.S.

As I noted in my blog post last week, Modi has (or seemingly had) three eponymous stores here.

The first was on Madison Avenue in New York, with stores in the Wynn Las Vegas and the Ala Moana Center outdoor mall in Honolulu opening this past November.

On Thursday, the only phone number I could find online was for the New York store. When I called it, I got an automated message from Time Warner.

The Hawaii store is still listed on the Ala Moana website, but when I called during business hours Thursday, neither a machine nor a human answered.

At the Wynn Las Vegas, I didn’t see Nirav Modi listed among the shops on the hotel’s website. I reached out to the hotel’s public relations department Thursday but didn’t hear back, though it is fair to note that they might have their hands full relating to the public on other matters.