Margadarsi case: ‘Detailed probe required to prevent one of biggest financial frauds’
Margadarsi has exploited weak and innocent subscribers and has a history of accepting deposits illegally by violating Chit Fund Act, said N Sanjay, ADGP, CID
Hyderabad: A deeper probe into the account books of Margadarsi Chit Fund Pvt Ltd’s (MCFPL) is required to end the alleged blatant exploitation of depositors by the company, said a top CID official on Tuesday.
The investigation will continue as the Andhra Pradesh government is in the process of preventing one of the biggest financial frauds in the case, said N Sanjay, ADGP, CID in a press release.
Listing out several other preliminary findings as part of the investigation, he said Margadarsi’s violations also fall under the purview of Central government enforcement agencies, mandating the CID to meet them in Delhi and Hyderabad to take timely action against the company.
He alleged that Margadarsi has exploited weak and innocent subscribers and has a history of accepting deposits illegally by violating Chit Fund Act, 1982 to derive undue benefits from subscriptions of common people.
“Diversion of funds to their associate companies and other unknown investments clandestinely, laundering money by accepting cash subscriptions in high amounts in violation of various prevailing laws…,” said Sanjay detailing the company’s modus operandi.
Further, he alleged that Margadarsi forced subscribers to retain their money with the company continuously under the guise of offering interest and security by accepting deposits illegitimately.
Inflating cash balances, failing to file mandatory balance sheets as per Chit Fund Act at the branch level or with the Registrar of Chits at state level and not submitting necessary documents to regulators are some other violations, Sanjay listed out against the Cherukuri Ramoji Rao-run company.
Elaborating on the legal action so far, the CID chief said that all the accused in the case including chairman Rao, managing director Sailaja Kiran and auditor K Shravan have been booked as accused in seven FIRs under various sections.
However, he said that they were giving evasive answers and avoiding producing required information and documents either to the chit registrar or the CID.
Until now, the chit fund company’s assets worth more Rs 1,035 crore have been attached, Rs 793 crore on May 29 and Rs 242 crore on June 15. The company operate 37 branches in Andhra Pradesh and has a total of 108 branches, including in Telangana, Karnataka and Tamil Nadu, he said.
According to Sanjay, MCFPL has a total subscriber base of 1.04 lakh and 2,351 chit groups with a turnover of Rs 9,677 crore in both the Telugu states (Andhra Pradesh and Telangana) for fiscal 2021–22.
