The Enforcement Directorate (ED) has frozen 182 bank accounts in connection with a ₹2,000-crore multi-state chit fund scam. The central agency has also seized more than ₹1 crore in cash and six high-end luxury cars linked to the directors accused in the money laundering case during a recent raid.
The scam involves Welfare Building and Estates, a firm whose managing director is former Andhra Pradesh MLA Malla Vijaya Prasad. Varaha Ramakrishna Satya Sinivasa Rao Alla was also an accused director of the firm.
The investigation revealed that the company's directors and managing directors disguised it as a real estate business while collecting public funds. Chit Funds Act, 1982 prohibits chits that are not sanctioned or registered. The company also allegedly violated the clause under the Act which bans corporate chit funds from using their entity to run another commercial trade.
As is typical in chit fund scams, the company allegedly used funds collected from new investors to repay old investors, while using existing funds for personal gains. The maximum commission for a foreman is legally capped at 7 per cent.
The company closed all its operations from the branch offices in different states and cheated investors, the agency claimed.
It is revealed that the funds were collected from multiple investors across different states, including Odisha, West Bengal, Bihar, Jharkhand and Andhra Pradesh.
The probe revealed that the company manipulated financial statements to evade statutory obligations. They diverted the deposits under the false pretext of providing land in Visakhapatnam or doubling their investments.
The ED posted on X that its Bhubaneswar Zonal Office conducted search operations under the Prevention of Money Laundering Act (PMLA) in five business premises linked with WBEPL. It added that the search helped them find incriminating details, including various property documents and digital devices.
The ED had initiated the investigation based on multiple FIRs and charge sheets filed by the Economic Offences Wing in Bhubaneshwar, CBI, ACB, Odisha Police and Serious Fraud Investigation Office against WBEPL and its directors. Further investigation is ongoing.
