The Enforcement Directorate has unearthed a money laundering racket for which funds were rotated among eight companies and close to ₹8,000 crore was created by the masterminds as credits in their accounts, with the seed money of just ₹6.87 crore.
The same money was rotated over 100 times in each company within 12 days, using cheques. There was no movement of cash.
The infused money of ₹6.87 crore was ultimately returned to the companies controlled and managed by main accused Surendra and Virendra Jain. The accounts were closed soon to evade detection. The Jains were helping people allegedly launder unaccounted income by receiving the money in cash via mediators and then converting it into share premium transactions in the beneficiaries’ companies. In the process, they earned a certain percentage of the amount.
“Without the seed money of ₹6.87 crore, the Jain brothers could not have projected the inflated balance sheets of the eight companies. It directly resulted in increasing their share capital, reserve and surplus accounts, on account of share premium ranging from ₹990 crore to ₹1,000 crore for each company,” said an official.
However, the actual investment in the group companies was nil and in fact, they were inoperative, alleges the Directorate.
The balance sheets were inflated manifold by allegedly showing an increase in the share capital and investments through rotation of cheques.
The companies, allegedly controlled by the Jains, were earlier probed by the Serious Fraud Investigating Office, on the basis of which the ED is conducting money laundering investigations and has so far attached assets worth about ₹74 crore. The agency has also filed charge sheets against the Jain brothers, RJD MP Misa Bharti, her husband Shailesh Kumar, chartered accountant Rajesh Kumar Agarwal and others.
The Directorate has alleged that Mishail Packers and Printers, then owned by Ms. Bharti and her husband, was used to launder unaccounted money by taking accommodation entries from various companies controlled by the Jains, in the form of share capital and share premium.
After inflating the balance sheets, as alleged, the Jain brothers had attempted to get a judicial approval for amalgamation of one of the companies, NKS Holdings, with a listed NBFC, Shree Niwas Leasing and Finance Limited. However, it did not materialise and the matter is pending before the Delhi High Court.
“It is through the liquidation of fictitious investment in the merged company that the money could be laundered,” said the official.
The seed money for circular transactions was first received from Jaishree Financial Services Private Limited and RKG Finvest Limited. As it remains untraced, the agency has attached assets with an equivalent value, held by the Jains’ companies, the agency alleges.
