The Margadarsi Chit Fund Private Limited has diverted a huge amount of money collected from its subscribers into private banks, equity instruments, and utilized it for personal use, the officials probing the alleged irregularities committed by the firm have said.
In a complaint lodged with the police, Vijayawada Assistant Registrar of Chits V.S.S.V. Krishna Rao (Registration and Stamps Department) said that the chit fund company was being operated from Hyderabad by its chairman Cherukuri Ramoji Rao, and managing director Cherukuri Sailaja.
During the searches conducted at different branches of the firm, the investigation officers found many violations of the Chit Fund Act. “Mr. Ramoji Rao and Ms. Sailaja conspired with the foreman of the Labbipeta branch of the firm in Vijayawada, and others. The money collected from subscribers was diverted for personal use, in violation of the rules,” said Mr. Krishna Rao
Inspector-General of Registration and Stamps V. Ramakrishna, in the audit report, said that it was found that a huge amount of the subscribers’ money was used for personal gain and violations of Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 and Chit Funds Act, 1982, were noticed.
“Based on the audit report, cases have been registered against Mr. Ramoji Rao, Ms. Sailaja and several foremen of Margadarsi Chit Fund Private Limited on charges of Section 120 b (criminal breach of trust), Section 420 (cheating) and other sections,” Mr. Ramakrishna told The Hindu on March 14 (Tuesday).
Crime Investigation Department (CID) Additional Director-General N. Sanjay, who is investigating the alleged fraud by the private chit fund company, said that more searches would be conducted on the branches of the firm.
“In some cases, the chit fund companies are not returning the amount even after the chit was closed. They are asking for more documents and signatures of some sureties. In such cases, the deposits are being misused and the money running into several crores is not shown in any account,” Mr. Ramakrishna explained.
It was mentioned in the audit report that the company was running illegal deposit schemes with the money collected from the subscribers and paying interest to the public.
“With the connivance of the foreman, the employees of the corporate office had diverted the funds to other accounts. The firm had invested crores of rupees in mutual funds and its sister concern companies, in violation of the provisions of the Section 22 of Chit Funds Act,” Mr. Sanjay said.
Many other irregularities pertaining to unauthorised schemes were also mentioned in the audit report and further investigation is in progress, the I-G said.