The Enforcement Directorate (ED) on Wednesday said it has arrested three promoters of the Agri Gold Group of Companies in a Ponzi Scheme Fraud Case worth Rs 6,380 crore.
Those arrested have been identified as Avva Venkata Rama Rao, Avva Venkata Seshu Narayana Rao, Avva Hema Sundara Vara Prasad, who are the main accused under the sections of the prevention of money laundering act (PMLA).
The accused were produced before the ED PMLA Court, Hyderabad, which granted them 14-day judicial custody.
The ED had filed a case on the basis of multiple FIRs lodged in the Andhra Pradesh, Telangana and Karnataka.
The scam was perpetrated by Avva Venkata Rama Rao through Agri Gold Group of Companies. Avva Venkata Rama Rao had earlier worked in the Golden Forest CIS Fraud scheme.
The ED claimed that having learnt the tricks of the trade in that scheme, he hatched a well planned conspiracy and along with his seven brothers and other associates set up more than 150 companies and started collecting deposits from general public with a promise of providing developed plots/farm lands or withdrawal at a high rate of return on maturity/pre-term.
It said that thousands of commission agents were engaged to lure people with various schemes for hefty commission and managed to collect Rs 6,380 crore from 32,02,628 such investors.
In the end, the gullible investors neither got plots nor could recover their deposits. The group collected the deposits illegally from across the country.
According to ED officials, the company duped lakhs of investors from Andhra Pradesh, Telangana, Karnataka, Odisha, Tamil Nadu, Maharashtra, Chhattisgarh and Andaman and Nicobar islands.
The ED claimed that the modus operandi involved encouraging the gullible investors to pay the desired deposits either directly or through the agents under the pretext of real estate deal.
“These companies did not mention either the actual market value of the land or its location or its boundaries or survey numbers or the permissions required to be obtained for the layouts from the concerned authorities.
“They tried to color it as a real estate business, but in reality it was an unregulated unlicensed collective investment scheme,” it said.
The ED further stated that the Agri Gold Group of Companies did not obtain permission from RBI to collect such deposits.
Even SEBI has reported that the business of the Agri Gold Farm Estates India Private Limited was nothing but a Collective Investment Scheme and ordered the company to stop taking further deposits and return the money to the depositors.
“Instead of complying with the directions of the SEBI in letter and spirit, accused Avva Venkata Rama Rao opened new Companies and started collecting deposits in the names of new companies on the pretext of real estate business with the help of an army of commission agents, thus, turning this into a ponzi scam,” the ED said.
Although the accused collected deposits from 32 lakh investors, they never developed lands sufficient to give plots to all the investors. Even by their unverified claims, at the end they had only 5.5 lakh plots available with them.
“Considering the huge discrepancy in the amount of land available, the group should have used all their resources in identifying, buying and developing more land parcels. Instead, Avva Venkata Rama Rao and his family went on a siphoning spree and illegally diverted the public deposits and invested in myriad verticals and in private companies which were directly owned by their family,” the ED said.
During probe it was revealed that the accused also set up companies abroad and diverted large amounts of funds to off-shore entities.
“Their names also figured in the Paradise Leaks and they had incorporated companies with the help of the infamous Mossack Fonsenca in Cayman Islands,” the ED said.
Earlier, searches were conducted at the residences of Avva Venkata Rama Rao and other directors including the residences of auditors at Vijayawada and Hyderabad. Various property related documents, cash amount of Rs 22 lakh, digital devices and other documents were recovered and seized.