Former Karnataka Minister and mining baron Gali Janardhan Reddy was arrested by the Central Crime Branch on Sunday in the Rs 600 crore fraud case. He will now be produced to the magistrate. The CCB has arrested Reddy in connection with Ambidant Marketing pvt Ltd 'bribery' case.
Janardhan Reddy is accused of taking a Rs 20-crore bribe to bail Syed Ahmed Fareed, accused in a ponzi scheme case, out from the Enforcement Directorate investigation.
The investigating agency said they have also arrested Reddy's aide Mehfuz Ali Khan, who had allegedly struck a Rs 20-crore deal with Syed Ahmed Fareed of Ambidant Marketing Pvt Ltd to bail him out from the ED investigation.
After remaining elusive for three days, the former Minister on Saturday appeared before the police in connection with an alleged ponzi scam, and denied the allegations as a "political conspiracy".
Earlier on Saturday Reddy said he never panicked as neither his name figured in the FIR nor was any notice served on him.
Reddy who had dramatically appeared before the CCB police on Saturday was arrested and interrogated for allegedly shielding a father-son duo who have been accused of running a ponzi scheme in the name of 'Islamic Banking'.
The CCB police confirmed his arrest and produced him before a magistrate's residence in Bengaluru on Sunday. The Additional CP Alok Kumar of CCB said "We have taken the decision to arrest him on the basis of credible evidence and witnesses statements. We are going to recover the (Ponzi scheme) money and give it to the investors."
On Saturday before his dramatic appurtenance before the CCB investigating officers Reddy released a recorded video to the media and claimed innocence. In his recorded message from an unknown location along with his lawyer, Reddy denied all allegations and said it was a political conspiracy. He said he was not absconding and very much in the city. Reddy asserted that there was no need for him to flee as he was clean.
Reddy allegedly shielded a father and son, accused in the Rs 954-crore Ponzi scheme, from being investigated by the Enforcement Directorate (ED) for alleged money laundering in violation of the Foreign Exchange Management Act (FEMA). Reddy was on conditional bail since January 2015 in the multi-crore mining scam that rocked Karnataka in 2012. The then BJP Chief Minister Yeddyurappa had to resign due to the illegal mining scam.
The CCB has also arrested Reddy's close aide, Ali Khan, who had allegedly struck Rs 18-crore deal with the accused duo - Syed Ahmed Fareed and his son Syed Afaq Ahmed of Ambident Marketing Ltd, a city-based company that ran the Ponzi scheme and duped about 15,000 investors by laundering their money from Dubai.
The ED had earlier this week charged the duo with running a potential Ponzi scheme offering huge interest to investors in the name of 'Islamic banking'.
"Investigation revealed that Ambidant has been operating a potential Ponzi scheme and duping thousands of investors in the name of Islamic banking and a 'Halal' investment," said ED in a statement here.
According to ED sources a transaction of Rs 18 crore was tracked and revealed that the money was sent to Ramesh Kothari, owner of Ambika Jewellery. The money was then routed to another man named Ramesh, who owned a jewellery store in Bellari in Karnataka. The source confirmed that after police interrogation, Ramesh said that the money was given to Janardhana Reddy's personal assistant Ali in the form of gold bars.
Since inception on December 20, 2016, the company received cumulatively a whopping Rs 954 crore as investments under Haj/Umrah and Ultimate plans.
"We have written to the Reserve Bank of India (RBI) to have a re-look into the scheme to protect the interests of investors/depositors being duped by the company," said an ED official in the statement.
The Ponzi scheme is to collect huge money by companies fraudulently from depositors promising high interest rate but uses it to pay heavy interest on deposits raised earlier from another set of investors.