AP CID seeks Centre help in Margadarsi fraud probe

Vijayawada: Andhra Pradesh Crime Investigation Department (CID) additional director-general of police (DGP) N. Sanjay on Wednesday disclosed that they are pursuing the Margadarsi Chit Fund case with central enforcement agencies, as most of its violations come under the jurisdiction of all India agencies.

Speaking to media persons in New Delhi, he underlined that Margadarsi is involved in a series of illegal activities, including money laundering, siphoning of funds, corporate fraud, benami transactions in name of ghost subscribers, and evasion of income tax.

The additional DGP said violations of Margadarsi bear similarities with Satyam Computers and Sahara and Sarada fraud cases. Based on prima facie evidence, Margadarsi group adopted fraudulent accounting practices by inflating cash balances in the name of “cheques on hand” and “cash on hand” at branch level, not filing mandatory balance sheets at the branch level or with registrar of chits at state level, and not submitting necessary documents to regulators.

Sanjay said so far, seven FIRs have been registered based on complaints by commissioner and inspector general of stamps and registration of AP. Margadarsi Chit Funds Private Limited (MCFPL) chairman Ramoji Rao is accused No. 1, managing director Sailaja Kiran accused No. 2, foremen accused No. 3, MCFPL No. 4 and principal auditor K. Sravan accused No. 5. The officer alleged that all the accused are giving evasive answers during their questioning.

The additional DGP disclosed that preliminary findings in the case have revealed diversion of subscribers’ money to HUF-controlled entities and for high-risk market speculation; forcibly holding deposits in guise of “receipt against future subscriptions” by offering subscribers annual interest rate of four to five percent; not furnishing balance sheet and accounts; indulging in fudging of books and accounts; not cooperating with investigation agencies; and defaming and blaming the CID.

Sanjay underlined that these violations fall under the jurisdiction of central enforcement agencies. Hence, they are meeting officials of these organisations in New Delhi and requesting them to initiate timely action against Margadarsi.

Justifying AP’s probe against Margadarsi, the senior CID official quoted observations of Supreme Court in Shri Ram Chits and Investments vs Union of India case, stating that Chit Funds Act itself is one of the socioeconomic legislations, which had been enacted primarily to safeguard interests of chit subscribers. As the state is the custodian of welfare of its citizens, it could not remain a silent spectator without addressing the issues and taking preventive steps to avoid such frauds in future.