Hari Prasad, a whistle-blower in the ₹11,500-crore alleged fraud in Punjab National Bank, said on Friday that Mehul Choksi, managing director of Gitanjali Gems and business partner of Nirav Modi, reneged on business agreements with many investors and him “cheated” of ₹13 crore.
“I am not the only one. All over India, there are hundreds of people who got cheated by him,” Mr. Prasad, a Bengaluru-based investor, said in a telephone interview. “There is another guy called Digvijay Sinh Jadeja in Ahmedabad. He got cheated of ₹40 crore. There is another guy in Jodhpur called S.K. Jain. He got cheated of ₹2 crore. There is another guy in Delhi called Vibhav Khurana. He got cheated of ₹1.5 crore. So many people I know. They cheated so many small investors.”
The Enforcement Directorate has issued summons to billionaire diamond merchant Nirav Modi and Mr. Choksi in connection with the alleged fraudulent transactions in the Punjab National Bank. On February 15, the Directorate seized diamonds and gold worth ₹ 5,100 crore from Nirav Modi’s firms.
Mr. Prasad, 55, entered into a franchise business agreement with Mr. Choksi in 2012. “I have no business dealings with Nirav Modi and his company. In my franchise business, they promised so many things and ultimately after taking the investment from me, they did not fulfil any of the agreement terms and they cheated us,” he said.
“And then I decided to file a criminal complaint [in Bengaluru] and we investigated their modus operandi and we realised that there is some big fraud going on in this company and we reported that to the PMO.”
PMO acknowledgement
The Prime Minister’s Office acknowledged the complaint and then forwarded it to the Registrar of Companies (RoC) to look into the irregularities in the balance sheet as alleged by Mr. Prasad.
“The PMO has acknowledged my complaint. In fact, we should be happy that PM has created such a kind of thing or portal where people can make a complaint. After receiving my complaint they have forwarded it to the concerned authority which is the Registrar of Companies (ROC) to look into these irregularities in the balance sheet.
“Frankly speaking, if the RoC is not doing its job properly, how can you blame the PMO for that. People are taking political mileage out of this subject matter. RoC did nothing. After a few days, I got a letter from the PMO saying that my case has been disposed of. They have done their duty,” he said.
Soon after that, Mr. Prasad wrote to the RoC in July 2016 wanting to know if any action was taken.
“Since I did not get any response from RoC on July 29 I forwarded that copy of acknowledgement [from the PMO] to the RoC again stating that action needs to be taken immediately before the accused fled like Vijay Mallya of Kingfisher Group. Nothing happened,” Mr. Prasad said. “Later on I came to know from Mr. Choksi’s people that they managed some people in RoC and the matter is closed. They did not take any further action.”
In 2011-12, and even now, they are making a huge public display of their franchise model asking investors to come and invest with them, he said. “Against the investment, they will give minimum guaranteed fixed returns or profit margin whichever is higher. Also, they will take care of the store management and other things on their account.
“This is the business model they proposed and propagated and they got a lot of investment from different investors. After receiving the money from the investors systematically they have defrauded all the agreement terms not only with one but with 99% of the people.
“Neither did they supply the goods according to the agreed terms nor did they pay back the money when people wanted to exit the business. They were constantly engaged in cheating many people. In fact, I know 20-25 people who are suffering like this, starting from ₹50 lakh to ₹50 crore,” Mr. Prasad said.
The investors had a plan to get together and put up a united front, he said.
“All over India, about 50 people have filed FIR against this guy Choksi. All the victims wanted to take action together and we had a meeting but the geographical distance is so much between franchisee to franchisee…it was difficult to coordinate and so it did not work out.”
“I am pursuing my own case with the Bengaluru police and litigation is going on…these guys know the loopholes in the judiciary and technical matters of legal proceedings and they drag the cases for no reasons. The court will give two-month and three-month notice. So it is going on. When it will end God alone knows.”
“I have no affiliation with any political party. This is the sad story of India. When an action needs to be taken nobody takes. You have to blame the banks for giving money to such fraudsters,” Mr. Prasad said.
