Multiple agencies crackdown on Ponzi schemes, Saradha Group

Investigating wings Sebi, RBI, IT Department and Enforcement Directorate cracked down on Ponzi schemes and initiated action against Saradha Group under Prevention of Money Laundering Act (PMLA).

New Delhi: The government on Saturday said several of its investigating wings like Sebi, RBI, IT Department and Enforcement Directorate have begun crackdown on Ponzi schemes and have initiated action against Saradha Group under various laws including the Prevention of Money Laundering Act (PMLA).

Market regulator Securities and Exchange Board of India (Sebi) has launched prosecution in 59 cases of Collective Investment Scheme (CIS), while the Ministry of Corporate Affairs (MCA) is also investigating the Saradha Group for violation of various laws, Finance Ministry said in a release.

Besides, the Enforcement Directorate has also registered a case of suspected money laundering activities against this Kolkata-based group and others including its chief Sudipta Sen.

The statement comes in the wake of media reports which highlighted concerns regarding alleged illegal raising of deposits, especially in rural and semi-urban areas, in Eastern India and duping of the gullible public.

"Promoters of such companies are allegedly siphoning the monies collected and are using a sales network comprising local persons who are offered hefty commissions, in a manner similar to Ponzi schemes," the release said.

Ponzi schemes are used for activities involving collection of money from a large number of public investors with a promise of huge returns, which are typically paid from the deposits taken from new investors. The old investors and agents get hefty commissions for bringing in new investors.

The Ministry said Department of Financial Services (DFS) had also written to all the Chief Secretaries of State Governments in July 2012 requesting the states to strengthen the coordination mechanism between their regulatory institutions like the Economic Offences Wing of the State Police and the central agencies such as RBI, SEBI, Registrar of companies, Revenue Department and Enforcement Directorate.

"The RBI has also been addressed in this regard in
February 2013 and the matter is currently under examination by them," the Finance Ministry release said.

Listing out steps taken by MCA, it said the ministry has ordered inspection of the books of accounts and other records of 31 companies. Investigations were also ordered in some matters by the Serious Fraud Investigation Office (SFIO) in July and November 2012.

In the matter of 42 companies, Registrar of Companies, West Bengal has issued notices calling for information and explanations relating to collection of monies by those firms.

These orders have been issued by the MCA primarily to ascertain if these companies are violating the provisions of the Companies Act, 1956, and to decide the future course of action.

Listing the action taken with regard to Saradha Realty India Ltd, the Ministry said Sebi passed an order on April 23 directing the company to wind-up its existing collective investment schemes and refund the money collected under the schemes with returns which are due to the investors as per the terms of offer, within a period of three months.

Failing this, prosecution proceedings would be pursued by Sebi against the company. Income Tax Department has also initiated investigation of Saradha Group from the perspective of violation of taxation laws.

Based on an information received from Assam Police, Guwahati on registration of 4 FIRs against Sudipta Sen and others, the Enforcement Directorate also on April 25 registered a case under the provisions of Prevention of Money Laundering Act (PMLA) 2002, against Saradha Realty India Ltd and others, including Sudipta Sen.