BENGALURU: The Directorate of Enforcement on Wednesday announced the second arrest in the money laundering case linked to alleged irregularities in the Karnataka Bhovi Development Corporation (KBDC).
The ED, Bengaluru zone, on April 12 arrested former managing director of KBDC, R Leelavathy, under the Prevention of Money Laundering Act (PMLA), 2002. She was produced before the special court (PMLA) and was remanded to ED custody for seven days. Earlier this month, the agency had arrested KBDC former general manager BK Nagarajappa. He is presently in ED custody.
The ED had conducted search operations on April 4 under Section 17 of PMLA at various locations across Bengaluru, including the office of KBDC located at V V Tower and residential premises of accused/suspected persons, including Leelavathy.
In an official release on Wednesday, the central agency said “as part of the search proceedings, incriminating documents, digital records and details of properties acquired out of Proceeds of Crime (POC) have been collected”.
“During the investigation, it was found that Leelavathy was instrumental in the diversion of funds from KBDC by creating bank accounts fraudulently in the names of fake entities, in connivance with other suspects/accused - the then general manager and superintendent, KBDC, BK Nagarajappa, Subbappa and others. They managed to divert funds from the accounts of KBDC to the accounts of fake entities/ beneficiaries which were further transferred to friends and family members of the accused/suspects. Several bank accounts were opened and many beneficiaries/ intended beneficiaries were cheated,” the ED stated.
The money laundering case stems from multiple FIRs filed by the state police on charges of “misuse and diversion” of funds worth Rs 97 crore from the KBDC.