Mumbai: The economic offences wing (EOW) of Mumbai Police on Saturday said it has raided 30 locations linked to two companies and arrested their top executives who it said cheated around 2 million investors of ₹ 2,000 crore through illegal investment schemes.
The EOW acted on a complaint filed by the Securities and Exchange Board of India (Sebi) against Sai Prasad Properties Ltd (Goa) and Sai Prasad Foods Ltd (Pune), directors of the two companies and other office-bearers. The agency also said it arrested a managing director of one of the companies and is on the lookout for five more persons.
Joint commissioner of police, EOW, Dhananjay Kamalakar, said at a press conference that the companies operated several investment schemes through their 200 offices and a network of agents. “The investors were lured by the promise of 12-18% returns per annum, along with the collateral of land," Kamalakar said. The companies, he said, assured land as collateral for the investors, even though they did not possess enough land. The companies ran investment schemes that promised high returns on a daily or monthly investment, he added.
The companies operated without the mandatory registration certificate under section 12 (1B) of the Sebi Act and the Sebi (Collective Investment Schemes) Regulations, 1999, and also violated other orders issued by Sebi, the EOW chief said. “It is estimated that around 20 lakh investors across the country have put in at least ₹ 2,000 crore in the various collective investment schemes that the companies ran. The amount involved may even be more but would be revealed by the investigations that we are now carrying out," he said. The companies were also not registered as non-banking financial companies under the Reserve Bank of India regulations, he said.
After conducting searches in five states, EOW has frozen 192 accounts with 15 banks operated by the companies and an amount of ₹ 74 crore in these accounts. Offences have been registered against the companies of the Indian Penal Code and the Prize Chits and Money Circulation (Banning) Act of 1978. EOW has also applied the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act of 1999.
Kamalakar said the companies have been operating their collective investment schemes since 2001. Sebi launched its own investigation in 2010. “Sebi passed separate orders in January 2015 against both the companies, directing them to wind up their existing schemes and make repayments to the investors. But the companies continued with their schemes through their 11 sister concerns," Kamalakar said. The investigation would reveal if and where the companies have diversified the money deposited by the investors, he said. The two companies and their sister concerns in four other states—Madhya Pradesh, West Bengal, Rajasthan, and Chhattisgarh—have also been charged with various offences, he said.
EOW has over the last three days raided 27 offices and three residential premises of these companies, across Maharashtra, Madhya Pradesh, Uttar Pradesh, Delhi and Goa. “We have seized a lot of incriminating material and ₹ 50 lakh in cash. We have also identified 56 other properties and around 1,600 acres of agricultural land across Maharashtra, and we are in the process to secure these properties," he said.
EOW has reached out to the investors into these two companies and their 11 sister concerns, asking them to approach the agency with their grievances. Some investors have already come forward with their complaints, the EOW official said. The sister companies are Sai Prasad Infra & Constro Pvt. Ltd, Sai Prasad Global Finance & Investment Pvt. Ltd, Sai Prasad Landmarks Ltd, Future Day World Wide Marketing Ltd, Sai Prasad Media Pvt. Ltd, Sai Prasad Kisan Producer Co. Ltd, Milan Petroleum, Shri Samarth Multi State Co-op Credit Society Ltd, Sai Prasad Corp. Ltd, Swaraj Multi State Cooperative Credit Society Ltd, and Sai Prasad Energy Pvt Ltd.