NEW DELHI: A US bankruptcy court executive has charged fugitive jeweller Nirav Modi and two of his associates under a tough law once used to nail mobster families.
The use of the Racketeer Influenced and Corrupt Organizations Act (RICO), framed in 1970, signals the prosecutor’s aggressive approach in this case. The Chicago Outfit and the Gambino crime family are among mobster families convicted under this law.
After Punjab National Bank (PNB) last February accused Modi’s companies of perpetrating a $2 billion fraud across seven years, three of his companies—Firestar Diamond, A. Jaffe and Fantasy—filed for bankruptcy protection in the US. Subsequently, the US Bankruptcy Court for the Southern District of New York appointed Richard Levin as the managing trustee in the bankruptcy case.
The complaint filed in the bankruptcy court against Modi, Mihir Bhansali and Ajay Gandhi, top executives of the three bankrupt US companies, accused them of “breach of fiduciary duty, aiding and abetting breach of fiduciary duty, corporate waste, and violations of the RICO Act".
“Defendants Modi, Bhansali, and Gandhi, together with all Modi owned or controlled entities, form an association-in-fact engaged in and affecting interstate and foreign commerce for a common and continuing purpose of formulating and implementing a common scheme to defraud PNB for the Defendants’ personal enrichment through a pattern of fraud, lies, deceit, and corruption (hereinafter the “RICO Enterprise")," read the 27 March complaint filed by Levin.
A copy of the complaint was reviewed by Mint.
“On numerous occasions during the relevant period, the RICO Enterprise, as conducted and controlled by defendants Modi, Bhansali, and Gandhi, wilfully and knowingly transported, transmitted, or transferred in interstate or foreign commerce—or received, possessed, concealed, stored, bartered, sold, disposed of, or pledged as security for a loan—goods, wares, merchandise, securities, or money that crossed an interstate or international boundary after being stolen, converted, or taken by fraud," the complaint said.
Modi, who was arrested and denied bail in London last month, has an extradition request pending against him from New Delhi.
A successful conviction under the RICO Act could see Modi and his two associates facing up to 20 years in prison and an award of treble damages plus attorney’s fees. A US statute allows a court to triple the amount of damages that a defendant must pay to a plaintiff.
Expectedly, Levin in his complaint has asked that defendants “Modi, Bhansali, and Gandhi, jointly and severally, in treble the amount of damages to be proven at trial that were suffered by the debtors and their estates as a result of the defendants’ violation of the Racketeering Influenced Corrupt Organizations Act, plus interest, costs and attorneys’ fees".
A spokesperson for Levin declined to comment. Mint could not reach out to lawyers for Modi, Bhansali and Gandhi.