An investigation resulting from a US bankruptcy court order has suggested that Samuels Jewelers Inc., Mehul Choksi's US-owned company, may have sold lab-grown diamonds (LGDs) to customers with fraudulent grading reports that presented them as natural diamonds. The fraudulent reports were produced by a laboratory controlled through one of Choksi's businesses on the British Virgin Islands, the investigation indicated.
According to the Indian Express, "the US investigators have found that Independent Gemological Laboratories (IGL), a diamond grading firm that graded the quality of diamonds sold by Samuels Jewelers to its retail customers, is owned by a BVI entity controlled by Choksi's sister and a few of his close associates.'...the Examiner identified one instance of IGL certifying a lab-grown diamond that had been labelled by Samuels as natural..,' said the investigation report."
Reportedly, the chief executive officer of Samuels Jewelers, Farhad Wadia, in May 2017, alerted Choksi on the fraud at Samuels Jewelers, the Indian Express wrote."This included "circular transactions" worth $121 million (Rs 846 crore as on date) with 'puppet vendors' to inflate the company sales to get money from lenders in the US, fraudulent royalty payments of $5.4 million received by Samuels Jewelers from the Middle East and passing off lab-created diamonds as natural stones by the firm to customers."