The Enforcement Directorate (ED) has arrested Leo Meridian Infrastructure Projects & Hotels Ltd (LMIPHL) promoter GSC Raju and his close associate AV Prasad in a Rs 1,768 crore bank fraud case.
The Special PMLA Court in Hyderabad has directed both the accused to be sent to ED custody for seven days.
Earlier on December 30, 2019, the ED attached assets worth Rs 250.39 crore belonging to accused GSC Raju and his family and other directors of LMIPHL under the provisions of PMLA.
The financial probe agency initiated its investigation under the Prevention of Money Laundering Act (PMLA) on the basis of three FIRs registered by the Central Bureau of Investigation (CBI) and Bank Security and Frauds Cell (BS&FC) for defrauding a consortium of banks to the tune of Rs 1,768 Crore.
The probe agency has claimed that a well-planned conspiracy was executed by Raju along with his associates at LMIPHL to defraud banks by creating an illegal layout and selling plots to 315 persons.
“He further mortgaged parts of the already sold lands to the banks to obtain loan for a resort project. Even approach roads were also fraudulently mortgaged to the banks and revenue records were manipulated to cheat the Banks & Plot owners,” said ED.
According to officials, the loans sanctioned by the banks were siphoned off using shell vendor and contractor firms opened in the names of employees of LMIPHL.
“Part of the diverted funds were diverted back into LMIPHL as investments using Kolkata based jama-kharch companies,” added the ED.
The agency alleged that 33 shell companies were created along with bogus share capital and share premium book entries in the balance sheets of LMIPHL by Raju in connivance with certain chartered accountants.
It was allegedly used as bogus equity to fraudulently show margin money and to improve the debt-equity ratio of LMIPHL to cheat the banks for giving loans beyond the eligibility of the company.
“He had also created large number of fake vendor and contractor firms to siphon off the sanctioned loans under the guise of bogus invoices and bogus provision of material and services. A large portion of these diverted loan funds were cyclically rotated back into LMIPHL to create bogus exaggerated capital works in progress and in turn bogus fixed assets,” ED said.
“This was done to again cheat the banks into giving more loans and to match the asset side of Balance sheets with the Liability side,” the probe agency added.
Sources also told India Today TV the Raju and his family owned 95% of the company without any investment. It has been also alleged that LMIPHL never maintained any cash ledger, invoices for construction activities, fixed asset registers etc and failed to furnish the same during investigation.
“GSC Raju created another front company and even siphoned off the cash revenue of the resort with no intention to repay the banks. The banks could not enforce the mortgaged securities due to multiple title defects and fabrication of documents by accused in the loan applications,” said the agency.
During investigation, ED found that over the years many immovable properties were transferred to benami names and suspect tenancy rights were created by the accused persons by using strong local influence.
Investigation in the money laundering case by ED has allegedly unearthed 33 shell companies and more than 40 shell vendor and contractors.
The ED investigation has so far led to the identification and attachment of 3,43,17,948 promoters’ shares, 76,62,434 benami shares, 11 immovable properties of GSC Raju and his family, 38 immovable benami properties and assets of LMIPHL worth Rs 250.39 crore.