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The Punjab National Bank (PNB) and other public sector lenders aren't the only entities that got hit by Nirav Modi and Mehul Choksi, in a Rs 114 billion fraud that was unearthed at PNB recently. Over two dozen firms and 18 businessmen who had taken franchise of Nirav Modi and Mehul Choksi's jewellery brand between 2013 and 2017 also reportedly found themselves at the receiving end of frauds committed by the duo -- with the cases involving amounts upto Rs 200 million (Rs 20 crore).
Eighteen businessmen and 24 companies who had taken the franchise of Modi and Choksi's jewellery brand between 2013 and 2017 ended up filing criminal complaints of financial bankruptcy caused by breach and fraud committed by the duo, the Times of India reported. The concerned businessmen and firms, the report added, had set up franchise showrooms of Choksi-owned Gitanjali Jewellery and Gili across several cities and regions: Delhi, Agra, Meerut, Bengaluru, Mysuru, Karnal, and parts of Gujarat and Rajasthan.
Based on records accessed by it, the national daily reported that the first information reports (FIRs) filed in all the aforementioned cases dealt with criminal conspiracy, fraud, and violation of agreement by Choksi's firms. According to the records, even after taking security deposits between Rs 30 million (Rs 3 crore) and Rs 200 million (Rs 20 crore) from the franchisees, Choksi's firms violated agreements and committed fraud in sending stocks of diamond and precious gems to the former.
How did Choksi's firms cheat these businessmen?
According to the report, under the three-year contract signed between Choksi's firms and the franchisees, a fixed minimum guarantee commission at 12 per cent per annum on the security deposit, apart from the rental for the jewellery showroom, was mandated to be paid by Choksi.
However, the franchisees soon found violations: That Gitanjali would not replenish the stock, send items that were priced much lower than the market rates, or not pay the agreed upon rental.
Who all got caught up in the fraud?
Vaibhav Khurania, a Delhi-based businessman who had opened a retail store in Rajouri Garden, had to shut shop after Gitanjali allegedly failed to send him stocks worth Rs 30 million (Rs 3 crore) after having taken the payment, the national daily reported. The report quoted one particular FIR as saying: "In fact, they sent those items of which the market price was much less, but the showroom price was 3-4 times more of the actual price."
Larger sums were also involved in these alleged frauds. Accessing FIRs filed in Karnataka in 2015, the national daily reported that one Hari Prasad failed to get Rs 50 million (Rs 5 crore) rental for his showroom to sell Gitanjali jewellery.
Income tax department sources told the daily that tax sleuths were evaluating the liabilities, investments, and profit before and after tax by Choksi's firms.
Modi, Choksi continue to abscond
Nirav Modi, who is alleged to have carried out fraudulent transactions worth over Rs 114 billion (Rs 11,400 crore) with the Punjab National Bank, left the country in the first week of January, according to agency reports.
The 46-year old, who holds an Indian passport, reportedly left India on January 1, while his brother Nishal, a Belgian citizen, departed from the country on the same day, the reports added.
Modi's wife Ami, a US citizen, reportedly left on January 6 and his uncle and business partner Mehul Choksi, the promoter of Gitanjali jewellery chain, left on January 4, officials told news agencies.
Last week, the CBI registered a fresh FIR against the Gitanjali Group promoted by Mehul Choksi, uncle of billionaire jeweller Nirav Modi, following a complaint from PNB, and also approached the Interpol to locate them.
According to agency reports, officials said the fresh FIR was based on a complaint from PNB dated February 13. According to the complaint, the alleged loss to PNB was over Rs 48.86 billion, they said.