 "Rose Valley: Laundered investor funds used to fund luxury biz?")
Enforcement Directorate, which earlier attached 2,631 bank accounts of the group containing Rs 295 crore in them under the stringent provisions of the Prevention of Money Laundering Act (PMLA), found that of a total of 27 companies of the said conglomerate, only 6-9 were “operative”.
“The companies (of RV group) systematically engaged in diverting funds from one account to another of the group companies and also invested in other areas like real estate, jewellery, entertainment, hospitality and hotel business, among others, by depriving the original investors of their legitimate dues.
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“By such act of circulation and round-tripping of the money within the group companies, the real motive... was nothing but concealing the real source of funds circulated and invested in and outside the companies. Few examples of circulating money among the group companies and transferred/ diverted elsewhere and then again refunded to the original source account (were seen),” said a probe report prepared by the agency which has been accessed by PTI.
ED, the report said, found that there existed large-scale cross-holding among the group companies to hide and portray genuine investor funds as the companies’ capital.
“After scrutinising the balance sheet of Rose Valley Hotels and Entertainments Ltd and Rose Valley Real Estate Construction Ltd for the year 2012-13, it is observed that Rose Valley Real Estate Construction Ltd has 99.51 per cent shareholding in Rose Valley Hotels and Entertainments Ltd and Rose Valley Hotels and Entertainments Ltd has 99.33 per cent shareholding in Rose Valley Real Estate Construction Ltd.
“From this, it is clear that, to defraud the public, public deposits were shown as the companies’ capital by way of credit in capital account through shareholding of its own group company. Examination of all the balance sheets of the group companies, it is seen mostly that shareholding pattern of various companies is by way of cross-holding among the group companies and it is only a fake capital to change the colour of public deposit into the companies’ capital,” it said.
ED also checked the records of the Registrar of Companies and found the income of the RV group of companies was too meagre to fund investment projects on their own and that all the companies of the group “have been suffering huge financial losses in various financial years”.
“It is also revealed that the money mobilised from the investors is shown under advances in the balance sheets and this was subsequently used for purchase of various properties and other investments in the states of West Bengal and others.
“The trail of money spent on purchase of the said properties are traced back to the accounts of Rose Valley Real Estate and Construction Ltd and Rose Valley Hotels and Entertainment Ltd where the funds have been accumulated by false promises from common people,” it said.
ED, earlier this year, arrested RV Chairman Gautam Kundu in this case in Kolkata and also filed a charge-sheet against the role of the firm in perpetrating the chit-fund scam, which it said was done by floating alleged dubious schemes such as recurring deposit, fixed deposit and monthly income schemes.
The agency has pegged the total volume of the alleged irregularities at Rs 15,000 crore in this ponzi scheme case.
“The company started collecting money from the depositors in different schemes and issuing provisional certificates in the name of booking rooms in hotels in different parts of the country but, in fact, they were not providing hotels to any of the investors rather they were doing money circulation by collecting deposits from the public with the promise of providing a rate of interest higher than that of the banks,” it said.