The Enforcement Directorate (ED), probing Ponzi schemes, arrested Rose Valley Chairman Gautam Kundu on Wednesday.
The ED had stepped up investigation against Kundu over the past five days. According to its estimates, Rose Valley had mopped up about Rs 15,000 crore from the public - approximately six times the money collected by Saradha, another fraudulent Ponzi scheme that came to light in 2013.
However, according to Subir De, convener, All India Small Depositors' Association, the company had raised nearly Rs 38,000 crore from different states - West Bengal, Tripura, Jharkhand, Odisha, Assam and Bihar.
In February, the Supreme Court had given an order that all competent authorities should take action against 113 listed companies that had raised money through Ponzi schemes, mostly based in West Bengal.
"After the judgment, we wrote a 1,200-page letter to Securities and Exchange Board of India (Sebi), Serious Fraud Investigation Office (SFIO), Reserve Bank of India (RBI), Central Bureau of Investigation (CBI), ED, ROC and the West Bengal government to take action against the tainted companies, which I feel led to the arrest," said De, also the main petitioner of a PIL against the 113 companies.
Apart from raising money, mostly as advance for hotel room booking, Rose Valley use to run a clutch of channels and newspapers in West Bengal and Tripura. The firm had nearly Rs 1,500 crore of deposits in the accounts, apart from a land bank of Rs 5,000 crore at fair valuation, a company official had earlier said.
Earlier, the ED had seized Rs 295 crore from Rose Valley's 2,807 accounts across the country.
The land and properties owned by Rose Valley are embargoed for sale by authorities such as Sebi and the state government. Sebi had put the embargo since January 2011. The company used to raise money as advances for real estate projects.
Over the past year, however, Rose Valley had been focusing on its time-share business for booking hotel rooms. Time share is a common scheme in the tourism sector, through which hotels and resorts give long-term membership, or use rights, against a lump sum amount.
