ED says Mehul Choksi cheated customers by selling 'lab-grown' diamonds: Report

The Enforcement Directorate (ED) has filed a charge sheet against fugitive jeweller Mehul Choksi for running a racket to cheat customers by dealing in "lab-grown diamonds," according to a report by Hindustan Times.

Choksi is the key accused in the multi-crore Punjab National bank (PNB) fraud case.

In the past year, several company executives based in the US, UAE, Hong Kong, India revealed that “lab-grown diamonds” were sold by Choksi’s companies by falsely certifying them as natural diamonds.

The charge sheet filed by the ED, relying on these statements, aims to bolster India’s request to extradite Choksi from Antigua and Barbuda. He has reportedly became a citizen of Antigua and Barbuda under a citizenship programme.

The factory for lab-grown diamonds was run in Surat, the report said. The charge sheet alleges that large-scale production took place at the factory and it was personally monitored by Choksi.

The report added that the diamonds produced at the lab appeared similar in size, quality and colour when compared to natural diamonds.

In March 2019, a probe ordered by a US bankruptcy court also alleged that Choksi’s US firm Samuels Jewelers Inc, owned by Gitanjali Gems Ltd, had sold “lab-grown diamonds”.

The US probe forensic report also found that Samuels Jewelers received about Rs 139 crore from the fraudulent Letters of Undertaking (LoUs) issued to Gitanjali by PNB, according to a report by The Indian Express. The money was received through a “sham royalty agreement”, it added.

A former senior employee of Gitanjali Gems Ltd Santosh Srivastava told Moneycontrol last year that the “lab-produced diamonds were sold at a premium in the name of brand value, cuts and certifications that were given out. The certifications too were forged. A diamond that claimed to be of Grade A in a purchase made was actually Grade C.”

“The diamonds that were passed as precious and rare and were actually lab-produced coasted only 5-10 percent of the cost it was sold at,” he added.

ED had filed a charge sheet in 2018 underlining Choksi’s role in the PNB fraud case.