The Andhra Pradesh Criminal Investigation Department (CID) which is investigating the alleged irregularities in the operations of Margadarsi Chit Funds Private Limited (MCFPL), has registered seven FIRs against media baron and chairman of MCFPL Ramoji Rao, Managing Director of the company and Ramoji Rao’s daughter-in-law Sailaja Kiran and others on charges of cheating, breach of trust, and fraud.
Ramoji Rao is the chairman of the Eenadu media group, which is considered as an adversary by Chief Minister YS Jagan Mohan Reddy. The CM has several times indulged in name-calling against Ramoji Rao-owned media outlets, referring to them as “yellow media” for allegedly spreading propaganda against him. ‘Yellow media’ also hints at their alleged association with the Telugu Desam Party, which has a yellow-coloured party flag.
The CID said that during their investigation , they found that Margadarsi had engaged in illegal activities such as money laundering, siphoning of funds, corporate fraud, helping ghost subscribers indulge in benami transactions, and evasion of income tax. “As these violations pertain to the domain of central enforcement agencies, we have met concerned agencies at Delhi and Hyderabad and requested them to take timely action against the company,” the Additional Director General of Police of Andhra Pradesh CID said in a press note issued on Tuesday, June 20.
The CID said that the alleged violations and fraudulent methods adopted by Margadarsi are similar to high-profile cases such as the Satyam Computers scam, the Sahara India Pariwar investor fraud case, and the Saradha chit fund scandal. “We are in the process of preventing one of the biggest financial frauds ever seen in the name of chit fund operations by exploiting the weak and innocent subscribers,” the agency claimed.
“Deeper probe into the account books of Margadarsi is imperative to put a stop to this blatant exploitation by the Margadarsi group,” the CID said in its media statement. The CID took over the investigation following a complaint from the Commissioner of the state Stamps and Registrations department. “All the accused A1 to A5 were questioned once. However they are giving evasive answers and not producing required information or documents either to the chit registrar or to the CID,” the CID said. Ramoji Rao has been named A1, MCFPL MD Sailaja Kiran as A2, concerned branch managers as A3, the MCFPL company itself as A4, and its principal auditor K Sravan as A5 in the FIRs.
The CID has registered the FIRs under sections 420 (cheating), 409 (criminal breach of trust), 120B (criminal conspiracy), 477A (falsification of accounts) of the Indian Penal Code (IPC), section 5 of the Andhra Pradesh Protection of Depositors of Financial Establishments Act 1999, and section 76 and 79 of the Chit Funds Act, 1982.
Based on their preliminary investigation, the CID alleged that the Margadarsi group has violated many key provisions of the Chit Funds Act. “Margadarsi group has diverted the subscribers money to HUF (Hindu Undivided Family) controlled entities and also into high risk stock market speculation such as mutual funds, violating established laws of the land. Margadarsi group is forcibly taking deposits illegally in the guise of receipt against future subscriptions’ by offering them annual interest rate of 4-5%,” the CID said.
The CID alleged that the Margadarsi group has not furnished its balance sheet and accounts as required under the Chit Funds Act. “Instead they are taking the plea that the preparation of financial statements as per the Companies Act is suffice which is completely incorrect and wrong (sic),” the CID said.
The CID has also accused the Margadarsi group of fudging its books and accounts by ‘window dressing’ the balance sheet (thereby altering their financial data to appeal to investors) and by not submitting required information as per the Chit Funds Act either at the branch level or with the Registrar of Chits at the state level. The CID alleged that instead of cooperating in the investigation, the accused were indulging in “defaming and blaming” the CID through various means.
The CID has attached movable properties of MCFPL worth over Rs 1035.53 crore. The annual turnover of MCFPL in Andhra Pradesh and Telangana for the year 2021-22 was Rs 9,677 crore, the CID disclosed.