A lot of questions came to mind Tuesday as I was working on the story about the bankruptcy filing of the three U.S. companies—Firestar Diamond Inc., Fantasy Inc. and A. Jaffe—ultimately owned by Nirav Modi, the Indian diamantaire at the center of a $1.8 billion bank fraud scandal.

How are they all connected to Modi? Is it accurate to say that he owns them?

Why a Chapter 11 filing in a case like this, beyond the obvious?

And what will happen to these three companies going forward?

Late Thursday afternoon, an affidavit was filed that helped to answer at least some of my questions.

The Modi Connection
Press reports about the Chapter 11 filings mainly used the word “owned” to link Modi and these U.S. operations, which isn’t inaccurate. But his ownership of the company is neither direct nor simple.

Ian Winters, the New York attorney handling the companies’ Chapter 11 case, said Tuesday that Modi was not an officer or a director in any of the three U.S. companies and was not involved in their day-to-day operation.

A. Jaffe, too, was quick to point out that its team here had no knowledge of what was happening in India. The second sentence of its statement on the bankruptcy filing read: “A. Jaffe and its core team here in the United States want to assure partners and customers that A. Jaffe is not in any way involved with any of the alleged conduct that is the subject of the accusations.”

According to the affidavit, Firestar Diamond Inc. was formed as a Delaware corporation in February 2004 as Jewelry Solutions International Inc. The name of the company changed three times over the next seven years, to Next Diamond Inc. (2005), Firestone Inc. (2007) and, finally in 2011, to the name it has now, Firestar Diamond Inc.

Fantasy Inc. was incorporated in Delaware in 2012 and is a wholly owned subsidiary of Firestar Diamond Inc.

A. Jaffe Inc., which traces its roots back to 1892, incorporated in New York in July 1975 under the name Sandberg & Sikorski Diamond Corp. In 1995, the company dropped the “Diamond” from its name before changing it again in 2011 to A. Jaffe Inc.

Firestar Diamond Inc. is a wholly owned subsidiary of Firestar Group Inc., a Delaware corporation. Firestar Group is owned by another Delaware corporation, Synergies Corp.

Synergies is a wholly owned subsidiary of a Hong Kong company called Firestar Holdings Ltd., which is a wholly owned subsidiary of an Indian company called Firestar International Ltd., of which Nirav Modi is “directly or indirectly” the majority shareholder, the affidavit states.  

A. Jaffe Inc., meanwhile, is 95 percent owned by Synergies, with founder Sam Sandberg holding the remaining 5 percent.

Do you need an Advil now? If so, feel free to grab a couple. I’ll wait.

Now, remember that conversation I reported on last week with the banker, in which he talked about how bankers are put off by the industry’s lack of transparency? This “spaghetti junction” of organization, as another industry insider described it, is exactly what he was talking about. 

Why Chapter 11?
There’s a section of the affidavit titled “Events Leading to the Chapter 11 filing” that, after running down the allegations against Modi, points to the same factor that Winters mentioned to me on the phone Tuesday when I was interviewing him about the bankruptcy filing.

Modi’s factories in India that made most of the jewelry for Firestar Diamond, Fantasy Inc. and A. Jaffe were seized and shut down, which, the affidavit points out, resulted in thousands of people losing their jobs. The Indian entities also provided Firestar/Fantasy and A. Jaffe with back office and support functions.

That’s a sad reality of situations like this—that everyday working people lose their livelihoods because of the ego and greed (or, in this case still, alleged greed) of big corporations or individuals—and it shouldn’t be forgotten.

It’s also worth noting that job losses are what the principals of Firestar/Fantasy and A. Jaffe are trying to prevent from happening in the United States.  

Chapter 11 gives these three companies a chance to reorganize either with new owners or investors, provided they can find some who are willing and also can navigate the legalities of selling companies that are connected to an alleged, international white-collar crime.

Firestar Diamond International and Fantasy Inc. do about $90 million in sales a year, according to the affidavit, selling to big companies like Signet-owned Zales, Kay Jewelers, and Jared the Galleria of Jewelry, as well as Costco, Sam’s Club, Walmart and J.C. Penney. The company also holds the IP for the Endless Diamond brand.

A. Jaffe’s market is more upscale—it sells to “hundreds of the finest independent jewelry stores in America,” the affidavit states—and the company has been growing steadily over the past three years, with fiscal 2018 sales projected to reach $23 million.

Both businesses are looking for a buyer, and the affidavit told me the same thing that Winters did on the phone earlier this week: that “early expressions of interests” have been “strong.”

What About the Nirav Modi Stores?
This is not something that was included in the affidavit and is not connected to any of the three companies above, but I do want to talk a little bit about what we know about Modi’s stores in the U.S.

As I noted in my blog post last week, Modi has (or seemingly had) three eponymous stores here.

The first was on Madison Avenue in New York, with stores in the Wynn Las Vegas and the Ala Moana Center outdoor mall in Honolulu opening this past November.

On Thursday, the only phone number I could find online was for the New York store. When I called it, I got an automated message from Time Warner.

The Hawaii store is still listed on the Ala Moana website, but when I called during business hours Thursday, neither a machine nor a human answered.

At the Wynn Las Vegas, I didn’t see Nirav Modi listed among the shops on the hotel’s website. I reached out to the hotel’s public relations department Thursday but didn’t hear back, though it is fair to note that they might have their hands full relating to the public on other matters.

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