The Enforcement Directorate (ED) has registered a case of money laundering in connection with a Rs 600 crore alleged ponzi scheme in Bengaluru in which Ballari mining baron and BJP leader G Janardhana Reddy is alleged to be involved. The agency has registered the case under provisions of Prevention of Money Laundering Act (PMLA).
“An ECIR (equivalent to an FIR) based on an FIR by the Bengaluru Police has been registered in the matter. Reddy and his personal secretary K Mehfooz Khan would be probed in the matter,” an ED official said.
Reddy has been accused of accepting Rs 20 crore from the owners of Ambidant Marketing, the company that ran the alleged Ponzi scheme, for allegedly helping them in an ED investigation of forex violations. Police said the money was paid to Reddy through Khan. Both were arrested by the police, and are now on bail.
The Indian Express had first reported on November 17 that Reddy could face heat from the ED, which had sought details of the FIR from Bengaluru police.
The case pertains to an alleged ponzi scheme floated by Ambidant Marketing, which allegedly received funds from investors in the name of “Halal Investment” and offered returns up to 144% per annum. The company was not registered with the RBI or SEBI.
In the battle around Reddy, it is Centre versus Karnataka
The issue is snowballing into a row between the Centre and the state. The ED has been upset with Bengaluru police for claiming to reporters that Janardhana Reddy had accepted money to influence the ED probe, and has protested in writing. It has also asked the city police why it had not begun investigations immediately after it was informed about the Rs 600 crore scam by ED in March, and why its FIR mentions only Rs 1 crore when the investments are to the tune of Rs 600 crore. ED sources say that the agency would probe the case threadbare, and also check the veracity of the claims made by Bengaluru police about Reddy. “We are verifying information about some properties in Dubai created by this company. It is suspected it is a benami property of a Karnataka politician,” an ED officer said.
According to the case registered by the Crime Branch of Bengaluru police, Reddy allegedly received Rs 20 crore in the form of gold bullions from the company’s owners in March this year to protect it against the ED, which was then probing the company for forex violations.
The ED had begun the probe in January under various sections of Foreign Exchange Management Act (FEMA) after receiving a reference from the Income-Tax department in November 2017. It had conducted searches at multiple premises of the company and its owners. Cash to the tune of Rs 1.97 crore was seized from the residential premises of Syed Fareed Ahmed, owner of the company. The case has been adjudicated, and the company has been fined Rs 1.85 crore under FEMA.
However, the ED was not pursuing any case against Reddy in this matter.