The Enforcement Directorate on Wednesday filed a charge sheet against PACL Ltd (erstwhile Pearls) and its chief Nirmal Singh Bhangoo in connection with a Ponzi scam involving over Rs49,100 crore, which was collected allegedly by two companies from 5.5 crore investors.
Apart from Bhangoo, who is in judicial custody, his three colleagues and other persons have also been named in the ED chargesheet filed in a special court under the Prevention of Money Laundering Act (PMLA).
The ED, which started the probe after lodging an first information report (FIR) in 2015 based on the Central Bureau of Investigation (CBI)'s case, had in January attached Australia-based assets of the Pearls Group and Bhangoo worth Rs472 crore.
In 2016, a report from The Australian had exposed the Australian connection of PACL and Bhangoo. This was published by Moneylife
(Read: PACL Scam: The Australian connection
). The report said, in Australia, Bhangoo and several of his family members teamed up with Gold Coast property developers Paul Brinsmead and Peter Madrers. The two Australians had operated the company Resort Corp, which developed large tracts of coastal land in the Tweed Shire in northern NSW before its group of 14 companies collapsed in March 2009, owing about $300 million, it said.
The CBI had arrested Bhangoo and his three colleagues in 2016 following allegations that they collected funds from investors in Delhi, Punjab, Haryana, Rajasthan and other states through ponzi schemes, in the name of real estate projects.
In the same year, Securities and Exchange Board of India (SEBI), as part of its recovery proceedings, attached all bank and demat accounts, mutual fund portfolios of PACL and it eight directors and promoters. In a release, SEBI said, the recovery proceedings have been initiated for their failure to comply with its order issued on 22 August 2014 directing, PACL and its directors and promoters to wind up the schemes, and refund Rs49,100 crore to the investors within three months from the date of the order. This amount is excluding further interest and all costs, charges and expenses incurred in the recovery proceedings.
Earlier in July this year, market regulator SEBI had said
that PACL had increased its offer to Rs23,000 from Rs20,000 to buy own properties. Due to this, the Justice RM Lodha Committee appointed by the Supreme Court had decided to invite final counter or revised proposals from interested parties.
The Lodha Committee is supervising the Supreme Court ordered process of selling PACL's assets across the country and refunding Rs49,100 crore collected from over 56 crore investors.
Bhangoo, his companies PACL and Pearls Golden Forest Ltd (PGFL), as well as his lakhs of commission agents were accused of cheating 5.5 crore investors on the pretext of sale and development of agriculture land.
The companies made false allotments of land to investors. However, the companies never owned any land in their own name.
Bhangoo and his companies promised the investors that allotment would be done on their investment between 90 and 270 days and if not, handsome returns would be paid.
The mobilisation of funds by PACL goes back prior to 1997. Upon receipt of a complaint, SEBI on 30 November 1999 and 10 December 1999 issued letters asking PACL to comply with the provisions of the collective investment scheme (CIS) Regulations.
PACL challenged these letters before the High Court of Rajasthan in December 1999, claiming that its scheme does not fall under the definition of CIS as defined under the CIS Regulation and SEBI Act. PACL also challenged the constitutional validity of the CIS Regulations.
The Rajasthan High Court on 28 November 2003, held that PACL's schemes were not CIS as defined under Section 11AA of the SEBI Act. The HC also quashed SEBI's letters issued to PACL.
SEBI filed an appeal before the Supreme Court against the order of Rajasthan HC. The SC on 25 February 2013, while allowing the appeal upheld the constitutional validity of CIS Regulations, and directed SEBI to investigate the matter and take appropriate actions.
After conducting an inquiry, SEBI on 22 August 2014, issued an order directing PACL, its promoters and directors to wind up all the existing CIS and refund the monies collected by the company to investors as per the terms of offer within a period of three months from the date of the Order.
PACL filed an appeal before the Securities Appellate Tribunal (SAT), which was dismissed on 12 August 2015. The SAT directed PACL and its promoters-directors to refund the money within three months. Since the company and its promoters-directors failed to refund the money to the investors as per the directions of SEBI and SAT, the market regulator said it has initiated the recovery proceedings.
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.