A chit fund operator in old city has wound up operations leaving investors in the lurch.
The total amount allegedly embezzled is estimated to be over Rs.60 lakh, police said.
The ‘fraud' came to light when the aggrieved investors lodged a complaint with the Chatrinaka police on Sunday alleging that the chit fund operator, Balreddy, was missing for the past few weeks. Chatrinaka Inspector N. Shyam Prasada Rao said Balreddy, a resident of Uppuguda, was operating chits ranging from Rs.50, 000 to Rs.1 lakh for the last four years.
Exert pressure
Once he started defaulting payments on schedule, some of the investors began exerting pressure on him.
He assured them of paying at the earliest and had even issued cheques before he went missing, the Inspector said.
It has also come to light that some of the investors did not claim the money even after the completion of the chit period as Balreddy had lured them by promising higher rates of interest.
Case registered
Based on a complaint lodged by investors, cases under the provisions of AP Chit Fund Act and Section 420 (cheating) of IPC were registered against Balreddy.
Special team
A special team was also constituted to probe into the transactions of the chit fund.
Police inquiries revealed that the operator had used the investments to disburse loans and he could not get these loans to be repaid on time. This resulted in the chit fund going bankrupt forcing the operator to wind up operations and flee, police officials said.
They said the operator had even filed an insolvency petition in the civil court. “Balreddy cannot escape as it's not a registered chit fund,” police officials added.
