The Enforcement Directorate (ED) has busted a Rs 700-crore foreign exchange scam perpetrated by a little-known firm in an operation that has also brought into focus reputed companies such as CG Power and Edelweiss among others.
Sources said that the ED registered a case against Capstone Forex, based out of the extended Mumbai suburb Mira Road, under the Foreign Exchange Management Act.
Capstone, a Reserve Bank of India (RBI)-registered full-fledged money changer (FFMC), came under the ED’s lens following a sharp rise in its revenues, from Rs 5.97 crore in FY15 to Rs 314.4 crore in FY18.
“After the ED sought details of its transactions, Capstone submitted proofs of documents – copies of passport and air tickets – supposedly belonging to customers who brought forex from it. But these documents proved to be fake prompting the ED to look deeper,” the source said.
The agency then unearthed a series of transactions as part of which several shell companies had deposited large amounts of money with Capstone.
Some of these companies had also dealt with reputed companies such as CG Power Solutions, Indianapolis Hospitality (owned by industrialist Jay Mehta, husband of actress Juhi Chawla), Consultshah Financial Services (whose director was also a non-executive independent director of the Edelweiss Group), Eros International Media, Jain Energy (Jain Irrigation Group), Navkar Builders, NextGen Films, Swatantryaveer VD Savarkar Multistate Cooperative Credit Society etc.
“In order to identify and track the said shell companies and to examine business transactions between them, Capstone Forex and companies like CG Power and Edelweiss, an investigation was also initiated,” an official said. “These companies also could not give any proper justification for the funds transferred to such shell companies”.
Officials suspect that the scam could be much bigger and the role of many more such companies could come to light as when the investigation proceeds.A statement from Eros International Media in response to the development said, "We strongly condemn the allegation and want to reassure the market, investors and stakeholders that Eros International Media Limited have not received any communication from ED and we have no business transactions with Capstone Forex."
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