New Delhi: The Enforcement Directorate (ED) has filed a charge sheet against fugitive jeweller Mehul Choksi, elaborating how he allegedly ran an organised racket to cheat customers and lenders in India, Dubai and the US, including top financial institutions, by dealing in “lab grown diamonds” and selling off properties, details accessed by media reveal.
The charge sheet is aimed at bolstering India’s extradition request for Choksi to Antigua and Barbuda sent under the UN Conventions against Corruption in March 2019. An official said on condition of anonymity that the charge sheet was filed a “few weeks back”. He, however, did not give a specific date.
In June this year, the ED brought back over 2,300 kg of polished diamonds and pearls worth Rs 13,500 crore of firms belonging to Nirav Modi and Mehul Choksi from Hong Kong, officials said.
Out of the 108 consignments that landed at Mumbai, 32 belong to overseas entities “controlled” by Modi while the rest are of Mehul Choksi firms.
The new charge sheet, relying on statements of several top executives of companies based in the US, UAE, Hong Kong and India, reveals how “lab grown diamonds” were being sold in the garb of natural diamonds through Choksi’s companies M/s Shanyo Gong Si Ltd in Hong Kong and M/s Voyager Brands and M/s Samuels Jewelers Inc in the US. The factory for lab-grown diamonds was run in Surat, where large-scale production took place, personally monitored by Choksi, the charge sheet says. These diamonds appear similar in size, quality and colour when compared to natural diamonds, it adds.
According to the charge sheet, in December 2017, Choksi called a meeting of his top employees in Hong Kong, informing them that “coming two-three months would be very tough for Gitanjali Group companies as they would be facing forensic audits”, while directing them not to travel to India during this time. The Central Bureau of Investigation (CBI) initiated a probe into the PNB fraud on 31 January, 2018.
In January 2018, Choksi tried to dispose of his company Gitanjali Infratech Ltd’s “Tatva Project” in Borivali (Mumbai) by transferring its development rights to one Laxmi Infra Developers Ltd, a Surat-based company owned by Vasant Gajera, according to the charges. Gajera has been charge-sheeted by ED along with Choksi.
CBI filed case in January 2018
After the CBI filed a case in January 2018, Choksi and Gajera signed an agreement, according to which, the latter was allowed to develop the project against the transfer of 50 unsold flats to Gitanjali Infratech apart from a payment of over ~30 crore, ED has said. Quoting a February 2019 report of a US Bankruptcy Court-appointed examiner John J Carney, which is now part of the ED charge sheet, the agency has said that Texas-based Samuels Jewelers Inc was used by Choksi for circulating money taken from PNB.
“Choksi and an international web of co-conspirators used Samuels and a series of puppet vendors to create the false appearance that Samuels was purchasing and/or selling jewellery to and from unrelated third parties. In fact, Samuels and related entities – were secretly selling inventory and laundering money themselves at the directions of Choksi and individuals under his control” the charge sheet says.
ED has stated that there were transactions worth $121 million in the form of purchases and sales from Samuels.
The primary goal of this, according to the charge sheet, “was to fraudulently induce Samuels’ primary lenders, Wells Fargo and Gordon Brothers, to authorize tens of millions of dollars of credit in advances which were ultimately funnelled outside the US to Choksi-controlled entities in India, Dubai and Hong Kong”.
The agency has alleged that puppet vendors in Hong Kong such as Shanyo Gong Si Ltd and Taipingyang Trading Ltd were established by Choksi by providing false paper and monetary trails, which allowed Choksi to use Samuels’ US affiliates as shipping hubs for inventory purchases from Gitanjali affiliates.
The agency has recorded a statement of a US national – Curtis Alan Lowrey – who previously co-owned M/s Independent Gemological Laboratories Inc; the firm was later bought by Choksi. Lowrey said that when he pointed out that lab-grown diamonds were being sold as natural diamonds, Choksi called him and directed him not to discuss such matters with anyone except him.
Former CEO of Samuels, Farhad K Wadia, also sent a “sworn affidavit and statement” to ED by post, now part of the charge sheet, in which he said that Choksi asked him to rebrand the whole business of Gitanjali in the US under the name of Voyager Brands and told him that his son – Rohan Choksi – was the boss of the group business in the US.
According to Wadia’s statement to ED, Choksi’s sister Neena Seth, daughter-in-law Snagda Talera and son Rohan Choksi would oversee Voyager Business in Austin and both Rohan and Snagda worked as his “eyes and ears”. Reacting to questions on the charge sheet, Choksi’s lawyer Vijay Aggarwal said: “Evidence is very weak. It shall not stand judicial scrutiny. Reverse burden of proof under fiscal laws doesn’t mean that prosecution need not prove even bedrock facts.” Calls made to Laxmi Developers could did not go through. An email query remained unanswered.