Hyderabad: The Andhra Pradesh CID, which is investigating alleged violations by Margadarsi Group, on Tuesday claimed they are “in the process of preventing one of the biggest financial frauds ever committed” under the guise of a chit fund.
Andhra Pradesh CID chief N. Sanjay, addressing mediapersons in Hyderabad, said: “Margadarsi Group is accepting deposits illegally, violating the Chit Funds Act, and is deriving undue benefits from subscriptions of common people by diverting funds to their associate companies and other unknown investments clandestinely.”
“They are also laundering money by accepting cash subscriptions in high amounts in violation of various laws,” he said.
The AP CID has already attached properties worth over ₹1,035 crore of the group, which include fixed deposits and mutual funds investments. “Process of winding up deposits worth around ₹604 crore is in the process and orders of winding up may be issued in a day or two. In this manner, the group might also soon shut shop,” he said.
Sanjay said that they have already apprised the Union ministries of corporate affairs and finance, Enforcement Directorate (ED), Serious Fraud Investigation Office (SFIO) and other agencies involved in probing white-collar offences.
“They have started their probe into the violations. We have also apprised our counterparts in Telangana, Karnataka and Tamil Nadu about the investigation, as Margadarsi has branches in these states also, in addition to Andhra Pradesh,” Sanjay said.
It has been established prima facie that the Margadarsi Group was committing violations by fraudulent accounting practices like inflating cash balances in the name of cheques on hand and cash on hand at the branch level, not filing mandatory balance sheets and accounts as per the Chit fund Act, either at the branch level or with the Registrar of Chits at state level, not submitting necessary documents to the regulators, who are duty-bound to find out the genuineness of the bloated figures reported upon.
“The main accused, Ramoji Rao, chairman of the group, Sailaja Kiran, MD, branch managers, principal auditor K. Sravan have been named as accused so far. During questioning, they admitted to filing balance sheets as per the Companies Act, while they, being a chit fund company, should file under Chit Fund Act. They are also not submitting the documents as asked by the IOs,” Sanjay said.
“Margadarsi Group has indulged in fudging books and accounts by ‘window dressing’ the balance sheet and by not submitting the required information. Instead of cooperating in the investigation process, the accused are indulging in defaming and blaming the CID in various fora and by various means,” he said.
Investigation is continuing in this direction, Sanjay said.
