business

Jeweler Files for Bankruptcy as PNB Fraud Rises to $2 Billion

Updated on
  • Firestar, affiliates file for bankruptcy in New York
  • Punjab National Bank shares plunge most since 2004 in Mumbai
A detailed timeline of India’s biggest bank fraud.

The international jewelry business that’s part of the empire controlled by Nirav Modi, a billionaire accused of masterminding India’s biggest bank fraud, has filed for bankruptcy in the U.S. just as the Indian lender at the heart of the scam revised up its fraud estimate.

A detailed timeline of India’s biggest bank fraud.

(Source: Bloomberg)

Firestar Diamond Inc. blamed liquidity and supply chain challenges and listed up to $100 million in assets and debt, according to Chapter 11 documents filed Monday in a bankruptcy court in New York. Back in India, Punjab National Bank told the stock exchanges that the fraudulent transactions could be $204 million more than the previously estimated $1.8 billion.

Nirav Modi

Photographer: Darren Gerrish/WireImage via Getty Images

Firestar isn’t linked to the complaints filed by authorities, the company said in a Feb. 5 email sent through an external spokeswoman. U.S. representatives for the companies didn’t respond to a message seeking comment. The Indian banks who’ve reported exposure to the fraud didn’t reply to emails sent Tuesday in Mumbai.

Previously: Jeweler to Stars Said to Be Accused of Massive India Bank Fraud

Modi, a jeweler who’s dressed actresses including Kate Winslet and Priyanka Chopra, has been accused along with Mehul Choksi of defrauding PNB. PNB alleges that the duo and their associates worked with some rogue PNB employees and used fake guarantees to obtain loans from abroad.

Shares Plunge

PNB shares fell 12.2 percent in Mumbai on Tuesday, the steepest drop since May 2004.

Indian Bank Frauds

Number of cases reported between April 1, 2014 and March 31, 2017

Source: Answer by minister in parliament on Feb. 2, 2018

* State Bank of India is the country's largest lender, holding about a fifth of the sector's total assets ** The PNB fraud was disclosed Feb. 14

The bankruptcy filing includes Firestar’s A. Jaffe Inc. wedding jewelry affiliate and Fantasy Inc. affiliate, and estimates the numbers of creditors at between 50 to 99. The company’s diamond operations span the U.S., Europe, the Middle East and the Far East, according to its website.

The case is Firestar Diamond Inc., 18-10509 U.S. Bankruptcy Court, Southern District of New York (Manhattan)

— With assistance by Paul Panckhurst

(Updates with stock performance in fifth paragraph.)
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