IPO scam accused snared in tax net

Giving details, I-T sources say Budhwani opened 11,000 bogus demat accounts by using genuine Election Commission issued identity-cards. He paid Rs 300 per card to open a demat account which was used to corner shares meant for small investors.

When this newspaper visited Budhwani’s residence in congested Asalfa village in Ghatkopar, there were no signs of opulence. A maid said Budhwani is not residing in the apartment. I-T sources say he rented this flat to mislead investigators. His second address in Ghatkopar turned out to be fake and neighbours said he moved out few years ago.

I-T officials said they are now looking at the role of another Mumbai investor, Manojdev Seksaria, who also opened fake demat accounts to corner IDFC shares. As of now, no search has taken place at his residence but as the paper trail is quite strong, IT officials say there is enough proof to nail Seksaria and get their share of tax. Seksaria was unavailable for comment when this newspaper visited his house.

Budhwani has used the same method to corner shares in other IPOs which included Suzlon Energy, SPL Industries, Shopper’s Stop, Provogue India, Nectar Life sciences, IL&FS Investmart, Gokuldas Exports and Gateway Distripacks.

Budhwani had received 2.98 lakh IDFC shares in his CDSL demat accounts held with Pratik-DP through off-market transactions prior to the date of listing on the stock exchanges on August 8. Budhwani used HDFC Bank to route his dealings. HDFC Bank is now under a RBI investigation for failing to detect Budhwani’s multiple accounts.

Again on August 12, Budhwani received through off-market transaction, 266 shares each from 2821 demat account holder and 532 shares from another CDSL account holder. Thus he received 7.5 lakh shares, taking his total holding to 10.95 lakh shares. All the 2,822 were opened on the same day in CDSL. Many of the fake demat account holders — had same address as Budhwani’s Ghatkopar and Ulhasnagar addresses.