Jaipur: The special operations group of Rajasthan police has uncovered a chit-fund scam worth Rs 1,100 crore perpetrated by a muti-state cooperative society named Sanjivani cooperative society.
According to the investigation officials, the cooperative society had 211 branches in Rajasthan and 26 in Gujarat, which duped approximately 1,46,991 investors who are known to have put in an estimated Rs 953 crore.
Between 2015-2019, the chairman of the society, along with other officials, forged documents to show fake loan disbursements. With the investors’ money, the members took over ten real estate and pharma companies, purchased land in South Africa and also set up a hotel in New Zealand.
Speaking to The Wire, additional superintendent of police Satya Pal Midha who is the investigating officer in the case said: “While investigating Sanjivani society’s account book, we found about 59,000 fake loan disbursement entries worth an average of Rs 2 lakh each and totalling to Rs 1,100 crore.”
The mastermind behind the scam, Vikram Singh, is a real estate businessman based in the Barmer region of the desert state. Singh has been put on a five-day remand for interrogation.
An FIR has been registered against Singh and his associates under Sections 420 (cheating), 406 (criminal breach of trust), 409 (criminal breach of trust by public servant or agent), 467 (forgery of valuable security), 468 (forgery for the purpose of cheating), 471 (using a forged document as genuine), 477A (falsification of accounts), 120B (criminal conspiracy) of the Indian Penal Code and Section 65 (tampering with computer source documents) of the Information Technology Act.
On Thursday, the investigation team also arrested four other officials of the co-operative society: former chairman Devi Singh, current chief executive officer (CEO) Kishan Singh Chuli, former chairman Shaitan Singh and current chairman Naresh Soni.
C.B. Yadav, associated with the All Investors Safety Organisation (AISO) points out at the new trend in the ponzi schemes, “Initially, the chit-fund scams used to happen through companies incorporated under the Companies Act, 1956. After 2010, the chit-fund scams that have come out were executed by the co-operative societies based in rural and semi-urban areas.”
Yadav explains that the chit-fund scams are operationalised through some trustworthy persons who have some social standing in the society. The companies appoint such persons as their “agents” to persuade people to invest in the schemes that are promised to provide them higher returns.
AISO has listed out the approximate money involved in the chit-fund scams by various companies. Rs 50,000 crore in the PACL scam, Rs 24,000 crore in the Sahara India scam, Rs 1,200 crore in the Green Touch scam, Rs 3000 crore in Rose Valley scam, Rs 10,000 crore in Sharda scam and Rs 1,500 crore in Samrda Jeevan scam among others.
As per the Co-operative Societies Act, the societies are based on self help achieved by pooling in money of the members residing in the nearby areas to enable their economic betterment.
While the Act provides for the audit of the co-operative societies by three panels of auditors – departmental auditors, certified auditors and chartered accountants – still many of them are involved in siphoning off the public money. “Action will be taken against the auditors of the society but it will take some time,” Midha, the investigating officer told The Wire.
Earlier this month, the Enforcement Directorate (ED) had attached assets worth over Rs 17 crore of Arbuda Credit Co-operative Society Ltd (ACCSL) and its promoter Rakesh Kumar Agrawal alias Bobby based in Rajasthan’s Mount Abu for luring gullible investors to deposit money in various schemes of the credit society by promising them higher returns.
The federal probe agency issued a provisional order, under the Prevention of Money Laundering Act (PMLA), for attachment of hotel Abu Grand and farm houses in Mount Abu, under construction real estate projects and residential properties in other parts of the state.
“The entities collected money from innocent people and subsequently siphoned it off through a company Ashtha Real Estate and used the same for other businesses and for purchase and construction of a number of immovable properties,” the ED said in a statement.
There is a history of chit-fund scams in India. PACL India Limited, a public limited company incorporated under the Companies Act, 1956 in 1996, sold agricultural land to customers through various plans. Over six crore families who invested in the company, expecting higher returns, have still not been refunded. The scam is estimated to have cost investors Rs 50,000 crore.
Ahead of the Lok Sabha elections, in April, thousands of PACL chit-fund victims protested in Prime Minister Narendra Modi’s rally in Rajasthan’s Chittorgarh for not acting on a 2016 Supreme Court order directing the Securities and Exchange Board of India (SEBI) to refund the PACL investors within six months.