Chit fund scam: Rose Valley chief held

NEW DELHI: Enforcement Directorate (ED) on Wednesday arrested Gautam Kundu, chairman of Rose Valley group which is embroiled in an over Rs 15,000 crore chit fund scam.
The agency had summoned Kundu for questioning in connection with the scam on March 27. However, owing to some pressing personal engagements Kundu asked for appearance on March 24. He was called for questioning again on Wednesday and arrested.
“We had asked him to furnish some documents related to the scam but he failed to do so. We have put him under arrest thus. He has been charged under provisions of Prevention of Money Laundering Act (PMLA),” said a senior ED official.
CBI had earlier this month conducted searches at 43 locations associated with Rose Valley across the country based on inputs provided by ED. This included the residence of Kundu among various other persons suspected to be associated with the scam.
The agency estimates that Rose Valley raised Rs 15,484 crore from small investors till June 2014 making it a scam even bigger than Saradha.
The agency took the action acting on the prosecution complaint filed by SEBI against the group of companies for “unauthorized issue of debentures” and violations under the Corporate Affairs Act.
Sources said Kundu's arrest was facilitated by vacating an earlier Calcutta high court order that no coercive action could be taken against him. The agency, however, got that order vacated from Patna high court and also from the Calcutta high court.
The ED, under the stringent provisions of the PMLA, had earlier attached 2,631 bank accounts of the Rose Valley group containing Rs 295 crore. After the bank accounts were frozen, the corporate name was changed to Sun City Group and Chocolate Group.
The group had allegedly floated a total of 27 companies for running the alleged chit fund operations out of which only half-a-dozen were active.
It is alleged that the firm had floated the scheme by promising inflated returns of between 8% and 27% on investments to gullible investors in various states.
The company had allegedly promised astronomical returns to depositors on land properties and assets and bookings done in the real estate sector. It is alleged that the company had made “cross investments” in its various sister firms to suppress its liabilities towards investors.
SEBI had probed the company before ED and CBI registered cases against the group.