After class action lawyers in Australia had worked at securing the rights of 50,000 Indian investors by filing caveats in the courts of that country, the Indian government also appears to have woken up to the overseas investments of Pearls India and its promoters, the Bhangoo family. According to a report published by The Australian, the Indian government plans to file extensive legal documents in the Federal Court detailing how $133 million defrauded from poor and 'gullible' investors in India was siphoned off to buy property in Australia.
"India's premier policing body and its corporate regulator have sent teams to Australia in recent days in an attempt to recover the money they claim was defrauded from investors in India's $10 billion Pearls Ponzi scam. It (the Indian government) will also conduct investigations into dealings in Australia into what it terms a 'larger conspiracy', "the report filed by Greg Bearup and Anthony Klan says.
According to The Australian, the Indians have been assured that they will receive assistance to help recover the money and to investigate any crimes that may have been committed in Australia. India's Central Bureau of -Investigations claims that between 2009 and 2013 at least $133 million was illegally siphoned off by the directors of Pearls India - four of whom are now in jail awaiting a trial - and sent to Australia.
"(The) investigation reveals that the accused directors of (Pearls group), in conspiracy with other accused persons, diverted the hard-earned money of gullible investors for investing in real estate in Australia," the CBI said in a charge sheet submitted to an Indian court. "As substantial amounts of funds have been transferred to Australia … in order to unearth the larger conspiracy, (the) role of other accused persons, and to ascertain the utilisation of funds, letters rogatories will be sent to Australia," the report says.
The Weekend Australian had obtained the charge sheet and other documents, extending to many hundreds of pages, prepared by Indian authorities, which will be filed with the Federal Court in Australia.
It is believed that letters asking for assistance have already been sent by Indian regulators and The Weekend Australian has been told that Australian authorities, including the Australian Securities & Investments Commission and the Australian Federal Police, have offered help.
The Australian reported that over $130 million, raised by Pearls and its founder, Nirmal Singh Bhangoo from Indian investors, have been transferred to Australia from 2009, with $82 million of that used to buy and refurbish the resort. Much of that money came to Australia via Pearls Infrastructure Projects, a company owned and controlled by Bhangoo and his family.
The money is alleged to have been siphoned off by the directors of Pearls, who then used it to buy real estate for themselves. While issuing fictitious land titles to investors, the directors allegedly bought properties worth hundreds of millions of dollars in India and funnelled money out of the country, including to Australia, where its directors bought luxury properties, including the Sheraton Mirage on the Gold Coast.
According to the report, in 2009 directors of Pearls India founded an Australian company, Pearls Australasia, with Gold Coast property developers Paul Brinsmead and Peter Madrers. Pearls Australasia then bought the Sheraton Mirage for $62 million and spent $20 million on a refurbishment with money from Pearls India. "Mr Brinsmead and Mr Madrers have said they were unaware of problems with Pearls when then entered into business with the company in 2009. The Australian developers were not involved with Pearls in India. They have said they are eager to work with Indian authorities in the effort to return funds," the report says.
The CBI charge sheet shows Pearls India entities made 39 separate payments to Gold Coast companies Pearls Australasia and Pearls Australasia Mirage-1. Those payments, totalling about $128 million, were made from 2009-14 and were deposited to a CBA branch in the suburban Treetops Plaza shopping centre at Burleigh Waters on the Gold Coast.
While India does not have a formal agreement with Australia, a committee comprising officers from the Securities and Exchange Board of India and headed by the former chief justice of India, RM Lodha, met recently with the senior AFP officer in India, Detective Inspector Michael Duthie, the report from The Australian says.
Mr Bhangoo and several of his associates have been sentenced to prison in India and two schemes they controlled - Pearls Agrotech Corp and Pearls Golden Forest - have been placed in the hands of Indian receivers and administrators. However, despite Bhangoo's jailing, Pearls Infrastructure Projects remains controlled by the Ponzi scheme founder and his family, prompting Queensland barrister Niall Colburn and Shine Lawyers solicitor Alex Moriarty - who are running the Pearls class action - to lodge caveats over the Sheraton and the mansion to prevent them from being sold. (Read: PACL Scam: Australian lawyers file caveats on Bhangoo's Sheraton Mirage resort
Mr Colburn, who was in India, had told the newspaper, "We now have sworn affidavits from over 50,000 Pearls investors and we expect to have many more in the near future. We aim to have these assets sold and the proceeds returned to the investors in Pearls who have suffered terribly."
There were an estimated five crore investors in Pearls, making it the biggest Ponzi-scheme in history, based on victim numbers.