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Updated: April 25, 2013 17:40 IST

Govt orders SFIO probe into chit fund companies

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An investor of Sharada Group chit fund company reacts while protesting against the closure of the company in Siliguri.
An investor of Sharada Group chit fund company reacts while protesting against the closure of the company in Siliguri.

In the wake of an alleged fraud involving thousands of crores by Kolkata-based Saradha group, the Centre on Thursday ordered a SFIO probe into suspected misuse of the public money by various chit fund companies.

A special task force has been set up under the Serious Fraud Investigation Office (SFIO) to carry out all investigations into such companies, the Corporate Affairs Ministry said on Thursday in a statement.

The decision was taken in view of a “larger public interest involved in these cases, and concerns regarding misuse/laundering by such companies of the ill-gotten wealth and the possibility that the promoters of these companies may strip these companies,” the Ministry said.

The probe follows raging public protest against alleged duping of lakhs of investors by Saradha group through their chit-fund and other money-pooling activities in West Bengal.

After being on the run for several days, Saradha Group Chief Sudipta Sen was arrested in Kashmir valley two days ago and has been brought to Kolkata.

The Corporate Affairs Ministry said that the Task Force will also coordinate with other law enforcement agencies and regulators wherever required, in its investigations.

Capital market regulator SEBI has already passed an order against one group entity, Saradha Realty India, asking it to wind up all collective investment schemes and refund the money collected from investors.

Besides, SEBI is also probing at least ten other Saradha entities for raising funds without the regulator’s approval.

The Income Tax Department would also soon start its investigations into the activities of this group.

Without specifically naming Saradha group, the Corporate Affairs Ministry said that it has “taken note of the misuse by certain chit fund companies who have raised huge sums of money from the public at large.”

The Ministry said the probe has been ordered in view of a larger public interest involved in the issues, although the state governments are the appropriate authorities for regulation of such chit fund companies and schemes under the Chit Fund Act, 1982.

"... it has been decided by the Ministry of Corporate Affairs to set up a Special Task Force in the SFIO to investigate the affairs of such companies. Accordingly, all investigations into such companies are being entrusted to SFIO with immediate effect," it said.

The decision to order a probe came after a meeting taken by the Corporate Affairs Minister Sachin Pilot of the top ministry officials this morning, where activities of Saradha group and other money-pooling entities were discussed.

Besides Saradha group, the meeting also deliberated on steps required to check suspected fraudulent activities of other chit fund companies, sources said.

The alleged scam at Saradha group is said to have defrauded thousands of investors, including poor people.

In the past, the Ministry had received complaints of alleged ponzi schemes at 73 companies of about a dozen different groups in West Bengal. These complaints, which also include those against Saradha group entities, were referred to concerned agencies and departments by the Ministry.

Saradha group has more than 100 firms registered with the RoC (Registrar of Companies) for businesses across sectors including real estate, auto, education and entertainment.

Most of these companies are registered with names starting with ‘Saradha’, while there are also firms with other names. Authorities are already looking into alleged ponzi or multi—level marketing schemes of at least ten Saradha firms.

Majority of the group’s firms are into real estate. These include Saradha Build—Dev, Saradha Realty India, Saradha Infra Properties, Saradha Township, Saradha Villa and Saradha Housing. The group also has registered companies related to education, exports, automobiles, shopping mall, agro development, tour and travels, among others.

Keep away Regulators RBI and SEBI away from Investigation. These companies are not registered with them. These companies are registered under companies act, 1956 and engage in the illegal business acceptance of deposit.Income is derived by these groups by calculating net daily collection i.e Daily collection minus daily maturity payment.Their Investment for running business is in - formation of number of companies for various sector and necessary investment in various sector to attract Public. Their main expenditure is on Advertisement.It is a serious economic offense violating RBI Act and Prevention of Money laundering Act. Amount involve in each group and in total by all the groups including Sahara may touch Million Crore - It should be taken as Anti National Activity done by these groups. Government and SEBI is diluting by saying it as chit fund scam.
Investigate and obtain records from the companies provided these group, leased line for on line connection with several branches.

from:  sanjit kumar
Posted on: Apr 27, 2013 at 14:04 IST

Serious economic offence is being done by large number of companies. High level enquiry is required in the involvement of Registrar of Companies, officers of Reserve Bank of India – Non Banking Division, Bankers and Auditors of the companies, officers of state government and some of the local Hindi News Paper in carrying of illegal business of acceptance of deposit from public without permission of RBI. Money laundering is also involved.National Economy is being damaged by large number of companies involved in the illegal business of acceptance of huge Public deposit. I am afraid that this activity may have implications on the National Integrity and Security apart from the risk to the investors.

from:  sanjit kumar
Posted on: Apr 25, 2013 at 18:12 IST

Now to cover up Nalini Chidambaram and other congress links they are
making sure the truth will now never come out by asking Corporate
affairs ministry to probe. Perhaps they could have used their trusted
agents CBI also to cover up this scam.

Bottom line of Chit fund Scam - No MEGA LOOT in India is possible
without CONGRESS involvement.

from:  Sanjay
Posted on: Apr 25, 2013 at 17:07 IST

We rely on government bodies to act as the bodyguards. SEBI cracking too late is not useful at all. The beleagured firm not able to return the money can be understood by the customers themselves. What good role has SEBI or any other agency has done to prevent the mishap? How many such finanicial companies are still lurking only to be found guilty later?

from:  Rajesh
Posted on: Apr 25, 2013 at 14:41 IST

It is the political connections of the fraudster and the non-chalant antitude of the law enforcing agencies (ministry of finance)causes this repeated cheating scam.

from:  jose Kochiyil
Posted on: Apr 25, 2013 at 14:16 IST

Hopes of thousands shattered!Thousand years in jail for this sort of fraudulent activities.

from:  Sumit kumar Rai
Posted on: Apr 25, 2013 at 14:11 IST

I don't have any sympathy for the investors. They got punishment of being greedy... No sensible person will believe this range of return in any investment.

Having said that, these type of scheme launchers must be punished heavily... and the people must not invest in such scheme!

from:  PeeKay
Posted on: Apr 25, 2013 at 12:48 IST

The appropriate headline should be "Ministry to order probe into chit fund scam to cover/protect politicians"

from:  Kakati
Posted on: Apr 25, 2013 at 12:39 IST
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