A major chit fund scam adopting the classic modus operandi of offering high interest rates against deposits has been unearthed at Nayarambalam within the Ernakulam Rural limits, the real scale of which is yet to be determined as petitions keep flooding in.
For now, the size of the scam stands at ₹60 lakh, with 40 investors petitioning the Njarakkal police over the loss of their money. The police have registered three first information reports bunching together all the 40 petitions even as they expect more petitions in the coming days.
K.P. Joshy, 58, of Nayarambalam, the managing director of Trading and Chit Funds Company Limited, had been arrested by the police and remanded in judicial custody. He had been slapped with IPC Sections 420 (cheating and dishonestly inducing delivery of property) and 406 (criminal breach of trust).
According to the police, the accused claimed to have committed no fraud but simply ran into trouble by paying steep interest on return.
“Investors have been cheated of deposits ranging from ₹3 lakh to ₹13 lakh collected from them on the pretext of lucrative investment plans entailing interest rates much higher than what was being offered by banks. Those cheated include even government employees who had invested their entire retirement benefits apparently lured by the potential high returns. There were even those who withdrew their deposits from nationalised banks to invest in the chit fund only to end up cheated,” V. Sajin Sasi, Inspector, Njarakkal police, said.
The victims also ended up losing even their principal investments. Apart from the high interest rates, the legacy of the company also probably played a part in winning the trust of investors. Though the company had been functional for 80 years, the fraud had been committed over the last 10 years, Mr. Sasi added.
As things stand now, the police believe that there were reasonable grounds for suspecting the role of other four members of the five-member director board of the company in the fraud. However, they have not been arraigned as accused and will be done so only after verifying whether they had deliberately played along in duping investors.
