VIJAYAWADA: The Andhra Pradesh Crime Investigation Department (APCID) has written to central investigation agencies like Enforcement Directorate, Income Tax and Serious Fraud Investigation Office (SFIO) to probe into the alleged Margadarsi Chit Fund Pvt Ltd (MCFPL) scam.
Speaking to reporters in New Delhi on Wednesday, APCID chief N Sanjay said they are working towards bringing to light one of the ‘biggest financial frauds ever committed under the pretext of chit fund operations by exploiting the weak and innocent subscribers’ in Andhra Pradesh. It may be noted that media baron Cherukuri Ramoji Rao is the chairman of MCFPL.
“During investigation, we identified illegal activities such as money laundering, siphoning of funds, corporate frauds, helping ghost subscribers to indulge in benami transactions and evasion of income tax. As these violations pertain to the domain of central enforcement agencies, we met them in Delhi and requested them to take timely action against the company,” he explained.
He alleged that the firm violated The Chit Fund Act 1982 to derive undue benefits from subscriptions of common people by way of diverting funds to their associate companies and other unknown investments clandestinely, laundering money by accepting cash subscriptions in high amounts and forcing subscribers to retain their money with the company by offering interest and security by accepting deposits
irregularly.
He added the APCID has prima facie established that the firm has committed violations through fraudulent accounting practices such as inflating cash balances, not filing mandatory balance sheets and accounts as per the Act either at the branch level or with the Registrar of Chits at the State-level and not submitting documents to the regulators who are duty bound to find out the genuineness of the bloated figures reported upon.
Stating that the firm violated many key provisions of The Chit Fund Act, the CID chief said MCFPL diverted subscribers’ money into highly risky stock market, forcibly took deposits illegally in the guise of ‘receipt against future subscriptions’ by offering them annual interest rate of 4-5% and did not furnish balance sheet and accounts as required under the Act.
“The firm is saying that the preparation of financial statements as per The Companies Act is sufficient. However, this is completely incorrect and wrong. Margadarsi group has indulged in the fudging of its books and accounts by ‘window dressing’ the balance sheet and not submitting the required information,” Sanjay said and added that instead of cooperating in the investigation process, they were indulging in defaming and blaming the CID in various fora.
MCFPL to take legal action
In an official statement, MCFPL said Sanjay made dramatic allegations. The firm claimed that the allegations made by the officer were ‘astonishing fabrications’ and they would initiate legal action to protect their interests