The US Department of Justice (DoJ) told a federal court on Saturday, 4 July that investors suffered no financial losses on the securities at the centre of the criminal case against Gautam Adani, using that finding as a key argument to support its push for dismissal of all criminal charges against the billionaire industrialist. The filing was submitted before the US District Court for the Eastern District of New York.

The Core Argument: No Investor Harm

In its detailed court filing, the DoJ stated plainly: 'Not a single penny has ever been lost on the securities at issue.' The department noted that two of the four notes central to the case 'are fully paid back,' while 'the other two notes are currently paid up, with no indication of any change ahead.'

The DoJ argued that this absence of financial harm substantially weakened the criminal prosecution and weighed heavily in favour of dropping all charges. It further concluded that 'there were no losses to recover' and that no restitution could have been awarded even if the case had proceeded to trial.

Nature of Investors: 'Ultra-Sophisticated' Institutions, Not Retail

The filing also challenged the premise that the alleged victims were ordinary investors deserving criminal-law protection. According to the DoJ, the securities were initially sold to highly sophisticated foreign-owned underwriters before being transferred to qualified institutional buyers, which then resold portions to sophisticated US investors.

'It would have been difficult to prove that those ultra-sophisticated investment entities were tricked by what were platitudes in the offering materials,' the filing states, 'let alone to the point of this being a criminal securities case.' The department argued that statements cited by prosecutors amounted to general claims about corporate integrity — the kind of broad assurances courts have previously treated as non-actionable corporate 'puffery.'

Jurisdictional and Legal Weaknesses

Beyond the investor-loss question, the DoJ raised concerns about the legal and jurisdictional foundations of the case. It argued that the alleged misconduct occurred almost entirely in India, raising questions about the reach of US securities law. Taken together with the absence of losses and the sophistication of the investors involved, the department concluded the allegations 'would be appropriate for a civil resolution at the very most.'

The DoJ noted that the previous administration had filed a parallel civil case based on the same facts, and that 'that case was settled earlier this year.' The department said it had already decided to seek dismissal of the criminal charges before the civil settlement was reached, but added that the settlement further reinforced the view that criminal prosecution served no purpose.

'Name and Shame': DoJ Criticises Prior Administration's Handling

In unusually sharp language, the DoJ criticised how its predecessor had handled the criminal case. It told the court the indictment appeared to have been designed as a 'name and shame' exercise with 'little realistic prospect of a trial ever occurring.'

'The indictment was unsealed in the final days of the prior Administration, apparently as a 'name and shame' designed to levy accusations without any realistic prospect of a trial ever occurring,' the filing states. The department said the prosecution was burdened by legal, jurisdictional and evidentiary weaknesses from the outset, and suggested the timing of the indictment reflected considerations unrelated to the merits of the case.

What Happens Next

With the DoJ now formally arguing for dismissal and the parallel civil case already settled, the criminal proceedings against Gautam Adani in the Eastern District of New York appear to be moving toward a close. The court's response to the dismissal filing will be the next critical development to watch.