Indian diamond tycoon Jatin Mehta fights to unfreeze fortune after fraud claims

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A diamond and jewelry tycoon who faces allegations of swindling 15 Indian lenders out of more than $1 billion is fighting back against a worldwide freeze on his assets in London court.

Lawyers for Jatin Mehta alleged in a court filing last week that the Indian unit of Standard Chartered Plc and liquidation firm Grant Thornton indulged in a “sleight of hand to get the May freezing order that is completely unjustified.” Mehta is “as much the victims of what occurred as the consortium of banks,” said lead lawyer Andrew Hunter, who is seeking to regain access to $932 million of his client’s assets.

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Mehta’s is among the most high-profile bank fraud cases in India’s diamond industry, which cuts or polishes about 90 percent of the world’s supply. A series of fraud allegations in the past decade has left an $8 billion hole in India’s banking system and led to multiple prosecutions and extradition efforts against tycoons who fled the country, including Vijay Mallya and Nirav Modi. Both men have denied the allegations and are contesting the separate cases against them.

Mehta in 2013 falsely defaulted on over $1 billion in loans to his two companies, Winsome Diamonds and Jewellery Ltd. and Forever Precious Diamonds & Jewellery Ltd., leaving 15 Indian banks unpaid, lawyers for Grant Thornton said in court filings. Mehta then allegedly laundered the cash through a clutch of firms across the globe, which was in turn used to finance the expansion of his laboratory-grown diamond business.

Grant Thornton is acting as liquidator for the companies, which were allegedly used by Mehta to launder money, and will return any money recovered to the Indian lenders, according to its court filings.

Mehta, who denies the charges against him, said he pioneered the business of lab-grown diamonds in a challenge to the established diamond industry. Such diamonds are not so much ‘grown’ as developed from slithers of diamond known as ‘seeds’ that are exposed to extreme heat and pressure to form a larger crystallized stone made of pure carbon.

The industry, backed by Standard Chartered has launched a sustained and unfair attack on the tycoon, and the bank and Grant Thornton are part of a “scheme to unfairly sue him in the UK and benefit themselves,” argued Mehta’s lawyers.

Spokespeople for Standard Chartered and Grant Thornton declined to comment for the story. Ian Wilson, a lawyer for Grant Thornton, accused Mehta of making up issues where there are none.

“The one place where money should not remain is in the hands of Mehta,” he said in court.

The court is set to give a ruling in the coming weeks.

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