Editors

The Nirav Modi Case: What Else We Learned This Week

EditorsMar 02, 2018

The Nirav Modi Case: What Else We Learned This Week

An affidavit filed Thursday maps out the connection between the Indian diamantaire and his U.S. companies that filed for bankruptcy.

2017_gavel-stock.jpg

A lot of questions came to mind Tuesday as I was working on the story about the bankruptcy filing of the three U.S. companies—Firestar Diamond Inc., Fantasy Inc. and A. Jaffe—ultimately owned by Nirav Modi, the Indian diamantaire at the center of a $1.8 billion bank fraud scandal.

How are they all connected to Modi? Is it accurate to say that he owns them?

Why a Chapter 11 filing in a case like this, beyond the obvious?

And what will happen to these three companies going forward?

Late Thursday afternoon, an affidavit was filed that helped to answer at least some of my questions.

The Modi Connection
Press reports about the Chapter 11 filings mainly used the word “owned” to link Modi and these U.S. operations, which isn’t inaccurate. But his ownership of the company is neither direct nor simple.

Ian Winters, the New York attorney handling the companies’ Chapter 11 case, said Tuesday that Modi was not an officer or a director in any of the three U.S. companies and was not involved in their day-to-day operation.

A. Jaffe, too, was quick to point out that its team here had no knowledge of what was happening in India. The second sentence of its statement on the bankruptcy filing read: “A. Jaffe and its core team here in the United States want to assure partners and customers that A. Jaffe is not in any way involved with any of the alleged conduct that is the subject of the accusations.”

According to the affidavit, Firestar Diamond Inc. was formed as a Delaware corporation in February 2004 as Jewelry Solutions International Inc. The name of the company changed three times over the next seven years, to Next Diamond Inc. (2005), Firestone Inc. (2007) and, finally in 2011, to the name it has now, Firestar Diamond Inc.

Fantasy Inc. was incorporated in Delaware in 2012 and is a wholly owned subsidiary of Firestar Diamond Inc.

A. Jaffe Inc., which traces its roots back to 1892, incorporated in New York in July 1975 under the name Sandberg & Sikorski Diamond Corp. In 1995, the company dropped the “Diamond” from its name before changing it again in 2011 to A. Jaffe Inc.

Firestar Diamond Inc. is a wholly owned subsidiary of Firestar Group Inc., a Delaware corporation. Firestar Group is owned by another Delaware corporation, Synergies Corp.

Synergies is a wholly owned subsidiary of a Hong

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.
Michelle Graffis the editor-in-chief at National Jeweler, directing the publication’s coverage both online and in print.

The Latest

18th century diamond necklace
AuctionsNov 14, 2024
18th-Century Diamond Necklace Sells for Nearly $5M

Sotheby’s sold the necklace, which potentially has ties to Marie-Antoinette, for $4.8 million to a woman bidding via phone.

Saks Fifth Avenue Holiday Window
MajorsNov 14, 2024
Saks Fifth Avenue Cancels Holiday Light Display

Instead of its usual elaborate display, the store will illuminate its façade and frame the windows to highlight its flagship’s architecture.

Grand Seiko store in Honolulu Hawaii
WatchesNov 14, 2024
Grand Seiko Partners With Ben Bridge on First Hawaii Store

The new Grand Seiko boutique is located in Honolulu’s Waikiki neighborhood.

Jewelers Mutual Group Cybersecurity
Brought to you by
Navigating Cybersecurity: Essential Guidance for Jewelers

From protecting customer data to safeguarding inventory records, it's crucial to learn how to tackle cybersecurity challenges.

Travelers on Gem Legacy Adventures Trip
SourcingNov 13, 2024
Gem Legacy Adventures Announces 2025 Trip

Eleven spots are available for travelers to visit Northern Tanzania and Southern Kenya from July 25 to Aug. 4.

Weekly QuizNov 14, 2024
This Week’s Quiz
Test your jewelry news knowledge by answering these questions.
Take the Quiz
Aga Khan Emerald
AuctionsNov 13, 2024
Aga Khan Emerald Sells for $8.8M, Sets Record

The emerald brooch-turned-pendant returned to auction after 55 years, setting a world record for most expensive emerald sold at auction.

17.97-carat Burmese ruby ring with pear-shaped diamonds
AuctionsNov 13, 2024
‘Exceptional’ Burmese Ruby Ring Tops $5M at Auction

Phillips also sold a 1.21-carat fancy red diamond dubbed the “Red Miracle” for more than $1 million at its jewelry auction in Geneva.

Article-Top-Image.jpg
Brought to you by
Enhance Your Expertise with IGI’s In-Person Courses in NYC

This fall, sharpen your skills in jewelry grading, quality control and diamond assessment.

Ariana Grande and Anya Taylor-Joy
MajorsNov 13, 2024
Ariana Grande, Anya Taylor-Joy Star in Holiday Jewelry Campaigns

From Swarovski to Tiffany & Co., jewelry retailers are enlisting celebrities to highlight their holiday offerings.

2024-2025 Royal Chain Catalog
MajorsNov 13, 2024
Royal Chain’s New Catalog Is Out Now

The 2024-2025 book introduces hundreds of new designs.

Vhernier Calla necklace
FinancialsNov 12, 2024
Cartier, Van Cleef & Arpels Continue to Shine for Richemont

Richemont’s jewelry sales ticked up 2 percent in the first half of the year, while watch sales plummeted 17 percent.

The Gemological Institute of America’s logo
GradingNov 12, 2024
GIA’s Next-Day Services Return for the Holidays

Offered by the lab since 2016, the holiday season special is good from now through mid-December.

Model wearing Mikimoto Chrome Hearts Exclusive Pearl Necklace
CollectionsNov 12, 2024
Mikimoto and Chrome Hearts Blend Aesthetics in New Collaboration

The “Mikimoto Chrome Hearts” jewelry brings pearls from Mikimoto together with distinctive motifs from Chrome Hearts.

Larkspur & Hawk Lily Tapestry Earrings
CollectionsNov 08, 2024
Piece of the Week: Larkspur & Hawk’s ‘Tapestry Lily’ Earrings

These earrings use flat-backed white quartz to create a window onto an antique ribbon embroidered with a floral design.

AGTA Spectrum winners
Events & AwardsNov 08, 2024
AGTA Reveals Spectrum, Cutting Edge Award Winners for 2024

This year’s AGTA Spectrum & Cutting Edge Awards included a new category for engagement rings and a new award highlighting female designers.

Brilliant Earth Jane Goodall jewelry
FinancialsNov 08, 2024
Brilliant Earth’s Q3 Sales Fall 13%

Plus, CEO Beth Gerstein shares her insight on the holiday season and the possibility of new tariffs.

Aurelia Demark London blue topaz bow earrings
TrendsNov 07, 2024
Amanda’s Style File: Golden and Blue November Hues

The month’s birthstones, citrine and blue topaz, reflect the changing colors of the season.

Jewelry designer Sidney Garber and ceramicist Carey Lowell
CollectionsNov 07, 2024
Sidney Garber Collaborates With Carey Lowell on Capsule Collection

The “Carey Lowell x Sidney Garber” collection stems from the friendship between the jewelry designer and ceramicist.

Ritani holiday ad campaign still image
MajorsNov 07, 2024
Ritani Debuts ‘No-Fuss’ Holiday TV Campaign

The two ads highlight diamond engagement rings and diamond studs with a straightforward approach.

American India Foundation
Policies & IssuesNov 07, 2024
Diamonds Do Good To Distribute $250K+ In Grants Next Year

In 2025, the nonprofit plans to continue its support of longstanding partners while also allocating some funds to a new initiative.

Alfred ‘Al’ Giddings Rolex Submariner watches Titanic
AuctionsNov 06, 2024
Two Rolexes With Ties to Titanic Head to Auction

The Rolex watches are from the collection of “Titanic” co-producer Alfred “Al” Giddings and will go up for sale at Sotheby’s next month.

Pandora cuban link bracelet
FinancialsNov 06, 2024
Pandora Posts Double-Digit Revenue Growth in Q3

The Danish jewelry company plans to open up to 150 concept stores this fiscal year.

Gemological Institute of America logo
GradingNov 06, 2024
GIA to Close Lab in Ramat Gan, Israel

The location will close by the end of the year due to it being financially unsustainable, GIA said.

Iris Law and Hero Fiennes in Moments of Joy campaign
MajorsNov 06, 2024
David Yurman’s Holiday Campaign Celebrates ‘Moments of Joy’

The new campaign stars Sterling K. Brown, Hero Fiennes Tiffin, Winnie Harlow, Kyle Kuzma, Arizona Muse, and Iris Law.

Jacquie Aiche Lizzie Bracelet
CollectionsNov 05, 2024
Jacquie Aiche is Hosting an Online Treasure Hunt

One lucky winner will receive a “Lizzie” diamond bracelet.

Samantha Larson
IndependentsNov 05, 2024
Long's Jewelers Names New Director of Buying

Samantha Larson has joined the Boston-based retailer.

Emerging Jewelers Accelerator Program logo
Events & AwardsNov 05, 2024
JA, BIJC Now Accepting EJAP Applications for 2025

The Emerging Jewelers Accelerator Program will guide retail jewelry entrepreneurs through an eight-month educational curriculum.

×

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