Assets worth Rs 35.70 crore have been attached under the anti-money laundering law in connection with a probe into a Bengaluru-based ponzi scheme under which numerous people were allegedly duped, the Enforcement Directorate (ED) said on Wednesday.
A provisional order has been issued under the Prevention of Money Laundering Act (PMLA) to attach land, office spaces and residential flats in Bengaluru and bank and fixed deposits of Rs 1.49 crore held in the name of Vikram Investments and associates.
The ED case of money laundering was filed on the basis of a March 2018 FIR of the Bengaluru Police. Police claimed that "partners and other associates of Vikram Investments like Raghavendra Srinath, K P Narasimhamurthy, M Prahlada, K C Nagaraj and Sutram Suresh cheated the general public by luring them to invest in Vikram Investments, promising high returns under the guise of commodity trading".
"The modus operandi adopted by the company was that they were involved in collecting investments from customers under the guise of commodity trading offering huge returns to the extent of up to 30-35 per cent per annum," the ED said in a statement.
The firm was not registered with any of the regulatory agencies including the Reserve Bank of India, it said. "They ensured that customers would get back their first instalment as promised. This earned them trust and they lured customers to invest even more after which the company would stop paying them back money, including the principal amount," the statement said.
Some "high profile personalities also invested in this scheme in the hope of earning huge returns”, it said. "Initially, the company paid profits to the existing investors out of funds obtained from its new investors," the ED statement said.
Probe found that the company "used" LIC agents and others who would convince their friends and family to invest, and in exchange they got heavy commission.
The term ponzi is often used for illicit collective investment schemes, rules for which were introduced after a big spurt in illegal money-pooling schemes in the 1990s in the name of plantation companies that promised huge returns from tea and other plantations.
A typical ponzi scheme involves the operator collecting a large amount of money from investors and paying them returns from their own money or the money collected from subsequent investors, rather than from profit earned by the person or the entity operating such a scheme.
The ED said preliminary probe suggests that around 2,420 persons had invested in the scheme and total investment was around Rs 417 crore out of which around Rs 331 crore was paid to the clients as profits and remaining Rs 86 crore was "embezzled" by Raghavendra Srinath and his associates.
"Srinath had deliberately delivered an exceptionally huge amount of net profit of around Rs 35 crore to one Mr R Krishna which was not possible in any prudent way," the ED investigation found.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
