The Enforcement Directorate (ED) has provisionally attached immovable and movable properties in the form of lands, buildings and share holdings worth Rs 1,984 crore under the Prevention of Money Laundering Act (PMLA) in a money laundering investigation against Karvy Stock Broking Ltd (KSBL) and its Chairman Comannder Parathasarathy and others.
The ED had initiated money laundering investigation on the basis of FIRs filed by the CCS Police Station, Hyderabad Police, on the complaints of lending banks who complained that the Karvy Group had availed large amounts of loans by illegally pledging their clients’ shares worth about Rs 2,800 crore. Subsequently, these loans turned into non-performing assets (NPA) after the release of the client's securities as per the orders of NSE and SEBI.
The KSBL was one of the leading stock brokers in the country with millions of clients. The scam came to light after a limited purpose inspection of KSBL conducted by NSE in 2019 revealed that KSBL had not revealed a Depository Participant DP Account and credited the funds raised by pledging of client securities to six of its own bank accounts (“Stock Broker-own Account”) instead of the “Stock Broker-Client Account”, the ED said in a statement.
The ED has collected the audit conducted by NSE and the orders passed by SEBI and ROC against KSBL and the forensic audit reports of BDO India LLP.
On September 22, 2021, the ED had conducted searches at nine locations and subsequently, Parathasarathy, CMD of Karvy Group, and G Hari Krishna, CFO, were brought on production warrant and produced before ED PMLA Special Court. They were arrested under PMLA on January 20 this year.
They are presently in judicial custody. Parathasarathy has been totally evasive and non-cooperative during the investigation and while admitting a few wrong doings by KSBL, has been shifting the entire blame on the CEO, CFO and other senior management.
In a separate case, the ED has provisionally attached movable and 376 immovable properties worth more than Rs 268 crore in Akshaya Gold Farms & Villas India Limited (AGFVIL) Ponzi scam case.
The attached properties are in the name of AGFVIL and sister concerns, its directors, relatives of directors and their benamidars.
Meanwhile, the ED has arrested 11 key accused persons involved in Chennai Port Trust- Term Deposit fraud case worth over Rs 45 crore in relation to money laundering case. In this case, the ED had initiated a money laundering investigation on the basis of FIR registered by the CBI, ACB, Chennai.
The ED had searched 15 premises across Tamil Nadu in June 2021 and during the course of investigation, the suspected persons were examined and it was found that the proceeds of crime or the money obtained out of liquidation of the Fixed Deposits pertaining to Chennai Port Trust was invested in acquiring more than 230 acres of land, several plots, vehicles, gold and deposits and the same were attached in December 2021 and February 2022, it added.