Ponzi scam: Karnataka ex-BJP minister G Janardhana Reddy arrestedhttps://indianexpress.com/article/india/crime/ponzi-scam-karnataka-ex-bjp-minister-g-janardhana-reddy-arrested-5441663/

Ponzi scam: Karnataka ex-BJP minister G Janardhana Reddy arrested

The former mining baron was produced before a magistrate Sunday evening and was remanded in judicial custody for 14 days.

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G Janardhan Reddy after a medical check up in Bengaluru on Sunday. (PTI)

FORMER BJP minister in Karnataka, G Janardhan Reddy, who is being prosecuted by the CBI for involvement in illegal mining in Ballari region of the state, was arrested by the Bengaluru Police’s Central Crime Branch (CCB) unit on Sunday for allegedly receiving funds from a finance firm accused of swindling hundreds of investors through Ponzi schemes.

Reddy, who appeared before the Crime Branch unit on Saturday for questioning after remaining elusive for three days, was placed under arrest on the basis of prima facie evidence of the owners of the finance firm, Ambident Marketing Pvt Ltd, transferring Rs 18 crore worth of gold — weighing 57 kg — and Rs two crore in cash through two aides of Reddy.

The former mining baron was produced before a magistrate Sunday evening and was remanded in judicial custody for 14 days. The magistrate did not entertain requests by the CCB for police custody and a bail plea filed by Reddy’s lawyers but directed both to argue their case in an open court on Monday.

The CCB stumbled on Reddy’s role in the cheating case in the course of an investigation related to an FIR filed against Ambident Marketing Pvt Ltd in Bengaluru on May 29 for defrauding dozens of people of their financial deposits after promising up to 40 per cent interest on investments, Bengaluru Police Commissioner T Suneel Kumar said last week.

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Kumar said on November 7 that Reddy went missing even as the police were trying to question him regarding findings that he was paid Rs 20 crore by Ambident’s proprietor Syed Ahmed Fareed to dodge a FEMA case filed against the firm in February 2018 by the Enforcement Directorate.

The police probe into Ambident’s activities revealed that Fareed allegedly cheated more than 15,000 people to the tune of over Rs 600 crore. In the course of the investigation, the CCB found pictures of a meeting that Fareed held with Reddy in a hotel in Bengaluru in March this year.

Inquiries with Fareed and his son Afaq, who was also at the meeting, revealed that Reddy’s help had been sought by the promoters of Ambident to end investigations launched by the ED. According to the CCB’s findings, Reddy allegedly sought Rs 20 crore to help Fareed. The amount was sought in the form of gold by Reddy, the investigation found.

The probe has so far found that Fareed approached Reddy through two intermediaries — Mehfuz Ali Khan, a former personal assistant of Reddy, and Brijesh Reddy, a contractor known to Fareed. Based on their negotiations, Fareed is alleged to have transferred Rs 18 crore to a jewellery firm in Bengaluru called Ambika Jewels Corporation for the purchase of 57 kg of gold. He is also alleged to have paid Rs 2 crore in cash to Reddy. The police have found evidence of these transactions.

The gold was then allegedly shifted from Bengaluru to Ballari by Khan and parked with a jeweller, Ramesh K of Rajmahal Fancy Jewellers, who is associated with Reddy. The CCB has not been able to find the gold despite arresting Ramesh several days ago.

Reddy has denied any association with Ambident Marketing Pvt Ltd and claimed in a bail petition filed in the Karnataka High Court last week that he was being targeted by the Congress-JDS coalition government in Karnataka with a political agenda.

The Enforcement Directorate — whose case against Ambident Marketing Pvt Ltd the former BJP minister was allegedly promising to influence — has stated that it imposed a penalty of Rs 1.86 crore on the firm earlier this year for violation of the Foreign Exchange Management Act (FEMA) 1999.

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The agency’s Bengaluru office has stated that it conducted searches on Ambident Marketing Pvt Ltd on January 4 and 5 this year after receiving information from the Income-Tax Department through a letter dated November 13, 2017 that the firm was involved in forex trading. The ED probe found FEMA violations.