Multiple agencies crackdown on Ponzi schemes, Saradha Group

Last Updated: Sat, Apr 27, 2013 11:58 hrs

The government today said several of its investigating wings like Sebi, RBI, IT Department and Enforcement Directorate have begun crackdown on Ponzi schemes and have initiated action against Saradha Group under various laws including the Prevention of Money Laundering Act (PMLA).

Market regulator Securities and Exchange Board of India (Sebi) has launched prosecution in 59 cases of Collective Investment Scheme (CIS), while the Ministry of Corporate Affairs (MCA) is also investigating the Saradha Group for violation of various laws, Finance Ministry said in a release.

Besides, the Enforcement Directorate has also registered a case of suspected money laundering activities against this Kolkata-based group and others including its chief Sudipta Sen.

The statement comes in the wake of media reports which highlighted concerns regarding alleged illegal raising of deposits, especially in rural and semi-urban areas, in Eastern India and duping of the gullible public.

"Promoters of such companies are allegedly siphoning the monies collected and are using a sales network comprising local persons who are offered hefty commissions, in a manner similar to Ponzi schemes," the release said.

Ponzi schemes are used for activities involving collection of money from a large number of public investors with a promise of huge returns, which are typically paid from the deposits taken from new investors. The old investors and agents get hefty commissions for bringing in new investors.

The Ministry said Department of Financial Services (DFS) had also written to all the Chief Secretaries of State Governments in July 2012 requesting the states to strengthen the coordination mechanism between their regulatory institutions like the Economic Offences Wing of the State Police and the central agencies such as RBI, SEBI, Registrar of companies, Revenue Department and Enforcement Directorate.

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