ED arrests GSC Raju, promoter of Leo Meridian Infrastructure, in Rs1,768 crore bank frau
The Enforcement Directorate (ED) on Wednesday said that it has arrested G.S.C. Raju, promoter of Leo Meridian Infrastructure Projects and Hotels Limited (LMIPHL) and his close associate A.V. Prasad in connection with its probe into money laundering case worth Rs 1,768 crore.
 
The ED said that the accused was arrested after the central financial probe agency filed three cases on the basis of the Central Bureau of Investigation (CBI) report for fraudulently availing loans by the accused in connivance with others from a consortium of banks and then defaulting on the same totalling to Rs 1,768 crore.
 
The ED said that Raju was arrested under the charges of Prevention of Money Laundering Act (PMLA), 2002.
 
The official said that the arrested accused were produced before a court which sent them to seven-day ED custody.
 
On December 30 last year, the ED had attached assets to the tune of Rs 250.39 crore belonging to accused LMIPHL, Raju, his family, his 'benamis' and directors of LMIPHL, under the provisions of PMLA.
 
During investigation it was revealed that a well planned conspiracy was executed by Raju along with his associates at LMIPHL to defraud the banks by creating an illegal layout and selling plots to 315 persons.
 
"He further mortgaged parts of the already sold lands to the banks to obtain loan for a resort project. Even approach roads were also fraudulently mortgaged to the banks and revenue records were manipulated to cheat the banks and plot owners," an ED official said.
 
He claimed that the loans sanctioned by the banks were siphoned off using shell vendors or contractor firms opened in the names of petty employees of LMIPHL.
 
The ED official further said that part of the diverted funds were diverted back into LMIPHL as investments using Kolkata based 'jama-kharch' companies.
 
The official said that during probe it was found that more than 33 shell companies and bogus share capital and share premium book entries in the balance sheets of LMIPHL were created by Raju with complicity of certain chartered accountants and they used bogus equity to fraudulently show margin money and to improve the debt-equity ratio of LMIPHL to cheat the banks for giving huge loans for which the company was otherwise not eligible.
 
The ED office further said that Raju had also created large number of fake vendor or contractor firms to siphon off the sanctioned loans, under the guise of bogus invoices and bogus provision of material and services.
 
"As part of the conspiracy, a large portion of diverted loan funds were cyclically rotated back into LMIPHL to create bogus exaggerated capital works in progress and in turn bogus fixed assets."
 
The official said that it was done to cheat the banks into giving more loans and to match the asset side of balance sheets with the liability side.
 
"By using bogus capital equity, bonus shares taken on fake balance sheets, Raju and his family became owner of 95 per cent of the company without any investment," the ED official said.
 
The Enforcement Directorate (ED) on Wednesday said that it has arrested G.S.C. Raju, promoter of Leo Meridian Infrastructure Projects and Hotels Limited (LMIPHL) and his close associate A.V. Prasad in connection with its probe into money laundering case worth Rs 1,768 crore.
 
The ED said that the accused was arrested after the central financial probe agency filed three cases on the basis of the Central Bureau of Investigation (CBI) report for fraudulently availing loans by the accused in connivance with others from a consortium of banks and then defaulting on the same totalling to Rs 1,768 crore.
 
The ED said that Raju was arrested under the charges of Prevention of Money Laundering Act (PMLA), 2002.
 
The official said that the arrested accused were produced before a court which sent them to seven-day ED custody.
 
On December 30 last year, the ED had attached assets to the tune of Rs 250.39 crore belonging to accused LMIPHL, Raju, his family, his 'benamis' and directors of LMIPHL, under the provisions of PMLA.
 
During investigation it was revealed that a well planned conspiracy was executed by Raju along with his associates at LMIPHL to defraud the banks by creating an illegal layout and selling plots to 315 persons.
 
"He further mortgaged parts of the already sold lands to the banks to obtain loan for a resort project. Even approach roads were also fraudulently mortgaged to the banks and revenue records were manipulated to cheat the banks and plot owners," an ED official said.
 
He claimed that the loans sanctioned by the banks were siphoned off using shell vendors or contractor firms opened in the names of petty employees of LMIPHL.
 
The ED official further said that part of the diverted funds were diverted back into LMIPHL as investments using Kolkata based 'jama-kharch' companies.
 
The official said that during probe it was found that more than 33 shell companies and bogus share capital and share premium book entries in the balance sheets of LMIPHL were created by Raju with complicity of certain chartered accountants and they used bogus equity to fraudulently show margin money and to improve the debt-equity ratio of LMIPHL to cheat the banks for giving huge loans for which the company was otherwise not eligible.
 
The ED office further said that Raju had also created large number of fake vendor or contractor firms to siphon off the sanctioned loans, under the guise of bogus invoices and bogus provision of material and services.
 
"As part of the conspiracy, a large portion of diverted loan funds were cyclically rotated back into LMIPHL to create bogus exaggerated capital works in progress and in turn bogus fixed assets."
 
The official said that it was done to cheat the banks into giving more loans and to match the asset side of balance sheets with the liability side.
 
"By using bogus capital equity, bonus shares taken on fake balance sheets, Raju and his family became owner of 95 per cent of the company without any investment," the ED official said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

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    COMMENTS

    Newme

    2 weeks ago

    If the Bank cannot do due diligence at the time of loan sanctioning, why is it even collecting processing fees?

    Supreme Court Allows Attachment of JP Morgan’s India Assets in Amrapali Case
    The Supreme Court has allowed the Enforcement Directorate (ED) to attach Indian properties of financial services provider JP Morgan Bank NA. The US company allegedly transacted with the beleaguered realty company Amrapali, allegedly to siphon off homebuyers' money in violation of the Foreign Exchange Management Act (FEMA) and Foreign Direct Investment (FDI) norms, the SC noted.  
     
    The apex court also allowed the ED to take into custody Amrapali’s chairman and managing director (CMD) Anil Sharma and director Shivpriya for questioning. It further said they would be sent back to jail once their interrogation is over. The SC had previously granted custody of the two executives until 20th January, on serious charges related to the Prevention of Money Laundering Act (PMLA). The next hearing is on 17 February 2020.
     
    In July 2019, the apex court had asked the ED to probe JP Morgan’s role in helping the Amrapali Group allegedly divert Rs140 crore from realty projects. The latest order is reportedly based on the ED’s request for permission to take additional action against JP Morgan.
     
    ED joint director Rajeshwar Singh, told the bench that the investigation against JP Morgan was complete and a compliant under PMLA had been filed. 
     
    As per the share subscription agreement, JP Morgan had invested Rs85 crore on 20 October 2010 for a preferential claim on profits in the ratio of 75% to JP Morgan and 25% to promoters of Amrapali Homes Project Pvt Ltd and Ultra Home.
     
    Later, two companies Neelkanth and Rudraksha, owned by a peon and an office boy of Amrapali's statutory auditor Anil Mittal, bought back the same shares from JP Morgan for an inflated price of Rs140 crore. The money was remitted to the US ostensibly to help the realty group launder and divert homebuyers’ funds.
    The bench ruled "They (JP Morgan) have lot of properties in India. We want you to attach their office or corporate properties of like amount. Then they will come running to us and we will see to it.”
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    COMMENTS

    Ibrahim Sakarwala

    2 weeks ago

    Not only should their properties be sealed but they should be blacklisted from doing business in India and their deeds must be widely published and publicised around the world. Shame on you Morgan Stanley for colluding with the corrupt and making fools of our system. If this had happened abroad by now the managers and the persons connected would be behind bars. Arrest them and without bail let them rot in our jails.

    m.prabhu.shankar

    2 weeks ago

    Excellent. Recover double or triple the amount so that fear spreads in the corporate environment so that corporates will fear indulging in such malpractices.

    Ramesh Poapt

    2 weeks ago

    Great!

    Sri Guru Raghavendra Sahakara Bank blames 62 dud loans worth Rs300 crore for crisis
    Assuring depositors that their money was "100 per cent safe" with the bank, Sri Guru Raghavendra Sahakara Bank Chairman K. Ramakrishna, here on Monday, said 62 loans had locked up Rs 300 crore of deposit.
     
    "Your money is 100 per cent safe with Sri Guru Raghavendra Sahakara Bank. It's my responsibility," Ramakrishna said at Sri Guru Narasimha Kalyanamandira auditorium, to assure depositors.
     
    Because of these 62 dud loans, the Reserve Bank of India (RBI) had restricted the lender from executing business, he said amid shouting by depositors.
     
    To assuage customers, the call to an assistant commissioner of police by Bengaluru South MP Tejaswi Surya -- not present -- was relayed on loudspeaker live and the MP claimed that he had spoken to Finance Minister Nirmala Sitharaman to help the customers.
     
    Ramakrishna said he would meet customers again on January 19 with all the details and numbers.
     
    Dramatic scenes and pandemonium ruled the auditorium before his arrival. Thousands of bank customers threatened to go en masse to the police station and file a case against Ramakrishna.
     
    As he addressed the gathering in Kannada, hundreds of depositors shouted back at him seeking clarifications.
     
    "The bank is saying I can't withdraw more than Rs 35,000. In case of our fixed deposit maturing, we will have to renew it as we can't encash it, " said Nagaraj M, 49, who has been dealing with the bank for the past six years.
     
    At the auditorium, thousands of depositors earlier demanded the bank chairman's presence to clarify the matter.
     
    The lender had invited depositors to the auditorium at 6 p.m. to update them on the bank's status, following a RBI directive restricting the bank from doing business with immediate effect.
     
    "We want the bank's directors here," shouted a depositor from the stage. A handful of policemen were trying to control the crowd and bring order to the assembly.
     
    Many elderly and retired persons had arrived to know the fate of their savings. Several women were also present at the meeting.
     
    "It was a good bank with only 0.5 per cent NPAs. Now we can't trust any bank. See what happened with the PMC Bank," said another customer.
     
    Shankar Sharma, 38, an employee of a private company, said majority of depositors were senior citizens and retirees. "I don't have an account with the bank, but my mother, uncle, aunt have deposited money in it. I came for them, " said Sharma.
     
    He said many of the bank's 35,000 clientele deposited more than Rs 5 lakh, which had total deposits of Rs 1,600 crore. The bank started operations in 1999.
     
    Ramakrishna was escorted away to safety by the police after his speech even as the depositors were screaming and agitating for justice.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    Ramesh Poapt

    2 weeks ago

    the sector was ripe for reforms since too long. in due course,
    it will have stricter regulations shortly from RBI which may prevent
    such cases. it has started already.

    shadi katyal

    2 weeks ago

    We were under the misleading impression that Modi sarkar has taken steps after looting of banks by Modi Jewelry and others but it seems he is too busy to pass CAA and NRC and let the economy go to dogs as we see bank after bank

    B Ravi

    2 weeks ago

    Once you have gone under RBI regulation means common people savings,FDs and other deposits which are bove 1 lac will be received is doubtful. Its a game played by RBI. RBI Now will just issue validity qutrly.

    Rajolu Ramam

    2 weeks ago

    PMC bank, now GURU RAGHAVENDRA SAHKARKRI BANK and tomorrow many more urban banks Cooperative banks are going to be " PHUT". The en tire system is totally fraudulent. Where the system is failing?
    RBI and the GOI MF has to seriously ponder over the debacle.
    CURRPTION IS OUR CULTURE.
    Unless severe punishment to the perpetrators quickly awarded, the entire financial will collapse which cannot be revived.

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