Nehal Modi, the younger brother of fugitive diamond merchant Nirav Modi, has once again found himself in the international spotlight after being arrested in the United States. The arrest comes at the request of Indian authorities, who are seeking his extradition in connection with the infamous Punjab National Bank (PNB) fraud, one of the largest banking scams in India’s history. Nehal, a Belgian national, was taken into custody in New York immediately after completing a nearly three-year prison sentence for a separate diamond fraud case in the US. His next court hearing is scheduled for July 17, where he is expected to seek bail, though US prosecutors are likely to oppose it.
The extradition request from India is based on charges of money laundering and criminal conspiracy, both stemming from his alleged role in the ₹13,000 crore PNB scam. The Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) have both filed chargesheets against him, and a Red Corner Notice was issued by Interpol in 2019. The coordinated efforts between Indian and US authorities mark a significant step in India’s pursuit of high-profile economic offenders.
The Loan-and-Pawn Diamond Fraud:
Nehal Modi’s criminal history extends beyond the borders of India. In 2020, a New York court convicted him for fraudulently obtaining over $2.6 million worth of diamonds from LLD Diamonds USA, one of the world’s leading diamond companies. The conviction was upheld in 2023, and Nehal served nearly three years in a US prison for this crime.
The details of the US case reveal a pattern strikingly similar to the PNB scam. In 2015, Nehal approached LLD Diamonds USA, claiming he was negotiating a large sale with retail giant Costco. On the basis of this false representation, LLD sold him diamonds on credit, expecting full payment within 90 days. Instead of using the diamonds for the purported sale, Nehal pawned them to secure short-term loans and diverted the proceeds for personal use. He made only partial payments to LLD, and by the time the company demanded immediate repayment, the diamonds had already been sold or pawned, and most of the money was gone. The Manhattan district attorney’s office described his actions as a “flawed scheme,” highlighting the calculated deception involved.
Role in the PNB Scam:
While Nehal’s US conviction was for a separate incident, his alleged involvement in the PNB scam is far more extensive and complex. According to Indian authorities, Nehal played a crucial role in assisting his brother Nirav Modi in the diversion and laundering of funds obtained through fraudulent Letters of Undertaking (LoUs) from Punjab National Bank. The scam, which involved a network of shell companies and offshore accounts, is estimated to have cost the bank over ₹13,000 crore.
Investigators allege that Nehal was responsible for moving large sums of illicit money through a web of global transactions. He is accused of destroying digital evidence, including mobile phones and servers, and intimidating witnesses to conceal the money trail. After the scam was exposed, Nehal reportedly took away diamonds worth $6 million and 150 boxes of pearls from Hong Kong, as well as large quantities of gold and cash from Dubai, and laundered them through safe havens. He also allegedly instructed dummy directors not to reveal his name to authorities and facilitated the destruction of passports to prevent witnesses from traveling.
Nehal’s name surfaced in bankruptcy proceedings in the US linked to the Modi family, further underlining his deep involvement in the family’s global diamond business and the complex financial schemes that underpinned their operations.
Extradition Battle and Legal Uncertainty:
With his recent arrest, Nehal Modi now faces the prospect of extradition to India, where he is wanted for his alleged role in the PNB scam and related money laundering activities. The US court will decide on his bail and the timeline for extradition proceedings at the next hearing. Given his Belgian nationality and the international nature of his crimes, the legal process is expected to be lengthy and closely watched by both Indian and international observers.
His brother Nirav Modi remains in a London jail, fighting extradition to India, and their uncle Mehul Choksi is also facing legal proceedings abroad. The case against Nehal Modi is a stark reminder of the global reach of financial crime and the challenges authorities face in bringing high-profile offenders to justice. As Indian and US agencies continue to coordinate their efforts, Nehal’s fate will likely set a precedent for future cross-border financial crime investigations.
