The Enforcement Directorate (ED) has busted a network of jewellers which was converting old Rs.500 and Rs.1000 notes into gold in connivance with bank officials. The money was being laundered using the banking channel through entry operators, including a chartered accountant, and shell companies.
The gold purchased by the accused jewellers in the name of a shell company was again sold to other cash hoarders at prices higher than the legal prevailing rate.
The ED has arrested Shashank Sinha and Vinit Gupta, managers of Axis Bank’s Kashmere Gate branch here, for allegedly helping the cash hoarders deposit close to Rs.40 crore in several bank accounts and transfer funds online. The ED has directed the banks concerned to freeze all transactions in 11 accounts for further scrutiny.
During interrogation, an alleged middleman disclosed that the bank officials had agreed to deposit cash on two per cent commission, in the form of gold bars. While one gold bar has been seized from Lucknow at the instance of one Shobhit Sinha, two gold bars, weighing two kg, were seized from a jeweller.
The managers revealed that bulk “change forms” and unverified identity documents – received from many customers for exchange of notes – were also used to facilitate further exchange of the demonetised currency.
In a press statement, Axis Bank said it had suspended the accused officials and was cooperating with the investigation.
The fraud was detected after the Delhi Police seized Rs.3.7 crore in old notes from three persons outside the Kashmere Gate branch on November 22. Subsequently, the Income-Tax Department conducted searches and on the suspicion of money laundering, the Enforcement Directorate was involved. Based on the police FIR, the ED registered a case under the Prevention of Money Laundering Act and busted the network.
“The group of jewellers had collected advances in old currency against the sale of gold and laundered the cash using bank accounts, through entry operators chartered accountant Rajeev Kushwaha, Devendra Jha and Raj Kumar Sharma,” said a senior ED official.
“Several shell companies, including Sunrise trading firm, Himalaya International and R.D. Traders – which have their bank accounts with the Kashmere Gate branch were used to deposit cash between November 10 and 22, in connivance with the bank mangers,” said the official.
Interestingly, the cash deposits were made in multiple installments of Rs.90 to Rs.99 lakh to evade detection by government agencies. On several occasions, more than one such cash deposit in a day was made in these accounts. The cash deposits were then transferred by way of RTGS to Beagle Marketing Pvt. Ltd. the same day, which is another shell company being managed and controlled by Mr. Kushwaha through dummy directors,” the official said.
The ED probe revealed that Ram Charan, one of the directors of Beagles Marketing, is a petty labourer working on daily wages. He lives in the Anna Nagar Jhuggi Camp area of Delhi. When contacted, he denied any association with the company. The other company “directors” also had nothing to do with its operations.
According to the ED, the funds were further transferred to several bullion traders for purchase of gold bars on the instructions of the jewellers and Mr. Kushwaha. Some of the bullion traders have been identified by the ED as Aadi Traders, Siddhi Vinayak Jewellers and Tushar Jewellers.
Though the invoices were raised by the bullion dealers in the name of Beagle Marketing, the physical delivery of gold was made to the jewellers in question. “This gold purchased by these Jewellers to various buyers at Rs. 45,000 to 50,000 per 10 gm, which is much higher than the legal rate,” said the official, adding that further arrests were likely soon.
