The central agency Serious Fraud investigation Office (SFIO) has held 14 companies of the Saradha group guilty of running ponzi schemes where the primary source of payment to subscribers was the collections made from newly-enrolled members rather than from income generated from investments.
Completing its probe into the Saradha chit fund scam, the SFIO said the companies, their promoters, directors and managerial personnel were found guilty on many counts for violation of various provisions of the Companies Act, 1956 including sections 58A and 628 dealing with illegal collection of deposits and false statements.
A statement released by the corporate affairs ministry said group companies declared by the SEBI to be carrying out unauthorised 'Collective Investment Schemes' (CIS) will be prosecuted for violation of the SEBI Act instead of section 58A of the Companies Act, 1956, as the former carries longer terms of imprisonment.
The SFIO also found several instances of violation of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.
"As prosecution under this law are to be initiated by the State Governments concerned, the Report along with evidence is being shared with the CBI. The Report is also being shared with SEBI for proceeding against companies which were found to be running unauthorized/illegal Collective Investment Schemes (CIS)," the statement said.
SFIO has also found evidence of violation of several provisions of the Indian Penal Code.
"Such sections are 107 (abetment of crime), 120B (criminal conspiracy), 403 (dishonest misappropriation of property), 406 (criminal breach of trust), 409 (criminal breach of trust by public servant), 415 (cheating), 418 (cheating with knowledge that wrongful loss will be caused), 419 (punishment for cheating by personation), 477A (falsification of accounts).
"Since, CBI is now investigating cases under the IPC under orders of the Supreme Court, it has been decided to share evidence collected by the SFIO with CBI so as to avoid duplication in prosecutions," it added.
