INDIA. Mumbai: The Directorate of Enforcement (ED) has arrested three promoters of a Hyderabad-based firm in an Rs 80.50 crore IPO (Initial Public Offer) scam under the provisions of the Prevention of Money Laundering Act (PMLA), 2002. The arrests took place on Wednesday.
Nirmal Kotecha, Pavan Kuchana, and Kishore Tapadia, associated with M/s Taksheel Solutions Limited, Hyderabad, were produced before the Metropolitan Sessions Court on Thursday and were remanded to judicial custody until October 25. Notably, Kotecha and Kuchana are residents of the Republic of Vanuatu and the USA, respectively.
The ED’s investigation was initiated based on a complaint filed by the Securities and Exchange Board of India (SEBI) under section 12(A) read with 24 of the SEBI Act, 1992, against M/s Taksheel Solutions, its promoters/directors, and others for irregularities related to the IPO of 55,00,000 shares priced at Rs. 10 each, with an issue price of Rs. 150, through which M/s Taksheel raised Rs. 80.50 crore.
Kotecha, Kuchana (CMD of Taksheel Solutions), and Tapadia devised a strategy to inflate M/s Taksheel Solutions’ revenue before issuing the IPO and subsequently divert the IPO proceeds.
Kotecha arranged Inter-Corporate Deposits (ICDs) totaling Rs. 34.50 crore to M/s Taksheel, and these funds were circulated through US-based entities owned by Kuchana.
Circular transactions were conducted with M/s Taksheel to inflate profitability before the IPO.
Following the IPO, the ICDs were repaid from the IPO proceeds. Out of the Rs. 80.50 crore IPO proceeds, Rs. 34.50 crore was diverted to US-based entities of Kuchana under the guise of payment for services.
From these US-based entities, Rs. 30.50 crore was transferred to entities in Singapore and Hong Kong under Kotecha’s control.
Additionally, another Rs. 23 crore from the IPO proceeds was transferred to Indian entities under the pretext of purchasing software products, and these funds were eventually transferred to Kotecha’s entities in Hong Kong and Dubai.
An amount of Rs. 18 crore from the proceeds of the crime was transferred from M/s Taksheel to various individuals under various pretexts, including payments to vendors and STPI development expenses.
Bank fraud
In a separate case involving the Karuvannur Service Co-op Bank, the ED provisionally attached assets worth Rs. 57.75 crore. These assets include 117 immovable properties comprising land and buildings in Kerala, Karnataka, and Tamil Nadu, 11 vehicles, fixed deposits, and credit balances in 92 bank accounts belonging to individuals involved in the offense of money laundering.
Earlier, the ED had attached properties worth Rs. 30 crore, including a resort in Thekkady, Kerala, owned by an individual named Bijoy, who had received illegal loans from the bank. In total, properties worth Rs. 87.75 crore have been attached so far.
On September 04 and September 26, four beneficiaries of the illegal loans—Sathish Kumar, Kiran P P, Arvindakshan, and C.K. Jils—were arrested. The investigation was initiated based on over 16 FIRs registered by the Kerala Police crime branch under Section 420 of the IPC in Thrissur District in 2021.
The ED’s investigation revealed that loans were illegally sanctioned to benamis by the bank in cash without sufficient collateral, as part of a conspiracy involving the bank’s secretary and committee members, along with the then bank manager.
The bogus loans were sanctioned multiple times for the same property without the knowledge of society members. These loan funds were siphoned off by the accused beneficiaries.
The bank had come under scrutiny by the Registrar of Co-Operative Societies in Thiruvananthapuram, who noted a diversion of funds exceeding Rs. 150 crore in his audit.
The ED had also conducted searches at 20 locations, including the bank in Irinjalakuda, Thrissur, on August 10, August 22, and September 18, and conducted five surveys.
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