ED Attaches ₹110 Crore Assets of Prayag Group in Money Laundering Case.

Headnote:

The Directorate of Enforcement (ED), Kolkata Zonal Office, has provisionally attached immovable properties worth ₹110 crore in connection with a money laundering case against the Prayag Group of Companies and its directors. The attachment follows an investigation revealing large-scale illegal deposit mobilisation through unauthorised deposit and money circulation schemes, resulting in unpaid dues of over ₹1,900 crore to depositors.

Background:

• The ED initiated investigation on the basis of an FIR and charge-sheet registered by the Central Bureau of Investigation (CBI).

• The CBI case was registered under provisions of the Indian Penal Code, 1860 and the Prize Chits & Money Circulation Schemes (Banning) Act, 1978.

• The FIR relates to large-scale illegal deposit mobilisation by the Prayag Group through unauthorised deposit schemes.

Findings of the ED Investigation

• The Prayag Group, primarily through Prayag Infotech Hi-Rise Ltd. and Prayag Infotech Network Pvt. Ltd., fraudulently collected ₹2,863 crore from 38,71,674 depositors.

• The funds were mobilised by offering high returns through illegal deposit and money circulation schemes without approval from RBI or SEBI.

• As on 31 March 2016, depositor dues amounting to ₹1,906 crore (excluding interest) remained unpaid.

• The investigation revealed that the collected funds were not utilised for legitimate business purposes.

• The group allegedly operated a Ponzi-type scheme, using money from new investors to repay earlier investors.

• A substantial portion of funds was diverted towards:

1. Acquisition of land and hotels
2. Film city projects
3. Takeover of companies
4. Commission payouts to agents
5. Advertisements and celebrity promotions
6. Personal enrichment of promoters and their family members

Role of Directors

• ED established that Basudeb Bagchi, Avik Bagchi and Swapna Bagchi, directors and promoters of the Prayag Group, personally benefitted from the proceeds of crime.

• The benefits were allegedly derived through:

1. Withdrawal of funds in the guise of remuneration
2. Acquisition of immovable properties in personal names
3. Allotment of shares to themselves without consideration
4. Routing of funds to related entities

Details of Attached Properties

• Total value of attached assets: ₹110 crore

• Prayag Group companies’ properties:

1. 450.42 acres of land with superstructures
2. Valued at approximately ₹104 crore
3. Located across West Bengal, Bihar and Assam
4. • Directors’ personal properties:
5. Immovable properties worth ₹6 crore
6. In the names of Basudeb Bagchi, Avik Bagchi and Swapna Bagchi

Current Status:

• A Prosecution Complaint has already been filed by ED before the Special PMLA Court.

• Basudeb Bagchi and Avik Bagchi are presently under judicial custody.

• Further investigation is ongoing.

Legal Provisions Involved:

• Prevention of Money Laundering Act, 2002 – Provisional attachment and prosecution of proceeds of crime

• Indian Penal Code, 1860 – Offences related to cheating and fraud

• Prize Chits & Money Circulation Schemes (Banning) Act, 1978 – Prohibition of illegal deposit schemes