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Thousands of agents were engaged on hefty commissions to lure people into making investments in various schemes
The Enforcement Directorate (ED) has arrested three promoters of the Agri Gold Group of companies on money laundering charge in connection with a Ponzi scam involving ₹6,380 crore collected from more than 32 lakh investors in six States.
The accused have been identified as Avva Venkata Rama Rao, Avva Venkata Seshu Narayana Rao and Avva Hema Sundara Vara Prasad. The ED will seek permission for their custodial interrogation. Its probe against them is based on multiple FIRs lodged in Andhra Pradesh, Telangana and Karnataka.
“The scam was perpetrated by Avva Venkata Rama Rao through Agri Gold Group of companies. He was earlier involved in the Golden Forest CIS fraud scheme. Having learnt the tricks of the trade, he hatched a conspiracy with his seven brothers and other associates to set up more than 150 companies. They collected deposits from general public on the promise of providing developed plots/farm lands or withdrawal at a high rate of return on maturity/pre-term,” said an ED official.
Thousands of agents were engaged on hefty commissions to lure people into making investments in various schemes. About 11.58 lakh depositors were from Andhra Pradesh, followed by 4.81 lakh from Karnataka, 1.67 lakh from Telangana, 70,820 from Odisha, 28,646 from Tamil Nadu and 8,688 from Maharashtra.
“In the end, the investors neither got plots nor could recover their deposits,” the official said, adding that the accused persons also encouraged investors to make deposits either directly or through the agents on the pretext of real estate deal.
The companies did not inform the investors about either the actual market value of the land, its location, boundaries, survey numbers or the permissions required from the authorities concerned for the layouts. “They tried to colour it as a real estate business, but in reality it was an unregulated unlicensed collective investment scheme. The Agri Gold Group of companies did not obtain permission from the Reserve Bank of India to collect such deposits,” said the ED.
SEBI directive
The Securities and Exchange Board of India (SEBI) had reported that the business of Agri Gold Farm Estates India Private Limited was nothing but a collective investment scheme. It ordered the company to stop taking further deposits and return the money to the depositors. However, instead of complying with directives, accused Avva Venkata Rama Rao allegedly floated new companies to collect funds through a large number of commission agents.
“Although the accused collected deposits from 32 lakh investors, they never developed land parcels sufficient to give plots to all the investors. Even going by their unverified claims, they had only 5.5 lakh plots available with them,” the ED said.
Agri Gold Farm Estates India Private Limited had 282 projects/ventures with a little over 3.12 lakh plots. In all, 1.06 lakh plots were registered to the investors. Agri Gold Constructions Private Limited had 98 projects with about 1.03 lakh plots, of which only 32,321 were registered. Dream Land Ventures Private Limited had 117 projects with about 1.23 lakh plots and 22,116 were registered to the investors.
The accused and his family members siphoned off huge amounts of money and also illegally diverted the funds for investments in myriad verticals and private companies directly owned by their relatives.
Based on the findings so far, the total diversion is understood to be ₹942.96 crore to other sectors like power, infrastructure, entertainment, food industry, travel agencies, land transport, electronics and electricals, rubber manufacture, agricultural activity, hotel business, chemicals, general trading and consumer goods, insurance, data processing, timber industry, mining and software publishing.
The ED found that the accused had set up entities overseas where a sizeable portion of the misappropriated money was diverted. Their names also figured in the Paradise Papers Leak. The accused had incorporated companies with the help of the Mossack Fonsenca in Cayman Islands, it said.
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