The Enforcement Directorate (ED) conducted raids at Ruchi Group-linked premises in Mumbai and Indore under the PMLA in connection with alleged bank fraud cases, freezing bank balances over Rs 20 lakh and seizing cash worth more than Rs 23 lakh
ED officers said the probe uncovered a sophisticated conspiracy involving the creation of numerous shell entities. Representational image
The Directorate of Enforcement (ED), Indore Zonal Office, has conducted search operations under the Prevention of Money Laundering Act (PMLA) at premises linked to the Ruchi Group at multiple locations in Mumbai and Indore, news agency IANS reported, quoting the agency, on Thursday.
The raids carried out on Tuesday targeted the group’s premises in connection with alleged bank fraud cases, the agency said.
ED, while briefing about the raids, said that the probe stems from multiple FIRs registered by the Central Bureau of Investigation (CBI), Bhopal, against several Ruchi Group entities, IANS reported.
The FIR in the alleged bank fraud case includes M/s Ruchi Global Ltd (now renamed M/s Agrotrade Enterprises Ltd), M/s Ruchi Acroni Industries Ltd (now M/s Steeltech Resources Ltd), and M/s RSAL Steel Pvt Ltd (now M/s LGB Steel Pvt. Ltd).
Furthermore, the Enforcement Directorate also said that the companies, promoted by the late Kailash Chandra Shahra and Umesh Shahra, are also accused of orchestrating large-scale bank frauds through fund diversion, syphoning, and accounting manipulations, resulting in substantial wrongful losses to public sector banks, IANS reported.
ED officers have revealed that the investigation uncovered a sophisticated conspiracy involving the creation of numerous shell entities.
They added that the conspiracy was done for round-tripping transactions, where spurious letters of credit and cash credit facilities were manipulated to divert funds for private gain.
“Bogus sales and purchases were recorded, and deliberate losses inflicted to syphon off loan amounts obtained ostensibly for legitimate business purposes,” ED stated.
The proceeds of crime generated from these frauds were allegedly concealed and layered to disguise their illicit origins.
The agency, while briefing about the seizures, further highlighted, “During the searches, authorities froze bank balances exceeding Rs 20 lakh belonging to the accused persons and their family members. Additionally, cash amounting to over Rs 23 lakh was seized, along with significant incriminating documents and digital devices that establish the roles of the accused in the fraud."
This action revives scrutiny on the Ruchi Group, which has faced prior allegations of financial irregularities.
CBI probe in 2021
In 2021, the CBI's probe had flagged similar issues in group companies, including an Rs 188 crore fraud case involving a bank consortium. Meanwhile, the current investigation by ED signals intensified efforts to trace and recover laundered assets, the agency said.
Further investigation is underway, and sources indicated that attachment of properties and deeper scrutiny of the beneficiaries of the diverted funds may follow.
(With inputs from IANS)
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