New Delhi: Two major multi-billion chit fund scams, known as Saradha and Rose Valley, that have wide political ramifications were the result of collapse of their ponzi schemes in 2013 in which millions of small investors lost their hard-earned money.
Victims, mainly from West Bengal, Assam and Odisha, were also spread over Uttar Pradesh, Jharkhand and Bihar.
The scams hit the limelight again after the Central Bureau of Investigation (CBI)on Sunday reached Kolkata Police Commissioner Rajiv Kumar's house to question him in these cases, triggering a political war between the West Bengal government and the Centre.
Saradha scandal stemmed from the collapse of ponzi scheme run by the Saradha Group, a consortium of over 200 private companies that were believed to be running collective investment schemes, popularly but incorrectly referred to as chit funds.
THe CBI's charge sheet and supplementary charge sheets in the scam have pointed to a nexus between the ruling Trinamool Congress Party in West Bengal and the chit-fund group.
It has also alleged how Pratidin Prakashani, a media house, was used to promote the deposit collection business of the Saradha Group, which collected around Rs 600 crore from 1.7 million depositors before collapsing in April 2013.
The media house, which had Trinamool leader and MP Srinjoy Bose as one of its editors, managed the editorial content of a television channel.
After the scandal, the government of West Bengal, where the Saradha Group and most of its investors were based, instituted an inquiry to investigate the collapse.
The central government, through the Income Tax Department and the Enforcement Directorate (ED), launched a multi-agency probe into the Saradha scam and similar ponzi schemes after the Supreme Court in May 2014 observed inter-state ramifications of the scheme in money laundering, regulatory failures and alleged political nexus. The apex court transferred all investigations to the CBI.
The CBI, which began the probe in 2014, questioned former Railway Minister and ex-Trinamool Congress vice-president Mukul Roy on January 30, 2015.
Roy was being investigated for his alleged role in Saradha's news operations and for association with Saradha chairman Sudipta Sen but the heat is now against the Kolkata Commissioner - the head of the special investigation team formed by the West Bengal government - who is accused by the CBI of destroying evidence in the case.
In February 2014, Sudipta Sen was sentenced to three years in jail.
Many prominent personalities, which included TMC MP Kunal Ghosh, former West Bengal Director General of Police Rajat Majumdar, a top football club official Debabrata Sarkar and Madan Mitra, a politician, were arrested for their alleged involvement in the scam.
The Rose Valley scam was even bigger than the Saradha scam and as per the ED estimates Rs 17,520 crore was reportedly raised from investors across India. The scam rocked West Bengal in 2013.
West Bengal Chief Minister Mamata Banerjee launched a 'Save the Constitution' protest in Kolkata on Sunday after the CBI landed in the city to question Kolkata Police Commissioner Kumar in the Saradha and Rose Valley chit fund cases.
The all-India small depositors association pegged the amount of Rose Valley scam at Rs 40,000 crore. A few reports pegged the amount at more than Rs 60,000 crore.
The Rose Valley group had allegedly floated 27 companies for running the alleged chit fund operations of which only half a dozen were active. The company is alleged to have made "cross investments" in its sister firms to suppress liabilities towards investors.
The states affected by the scam were West Bengal, Assam, Bihar, Jharkhand and Uttar Pradesh.
According to the ED, a part of the money was also used to bribe politicians for smooth running of the scam. The ED had frozen 2,500 accounts of the Rose Valley group and the agency suspects there are many more to be tracked and frozen.
In 2015, Rose Valley group chairman Gautam Kundu was arrested in a money laundering case, being probed by the CBI and the ED.
In the course of investigation, the government froze all 2,600 bank accounts of the Rose Valley group, which held around Rs 800-1,000 crore.
The name Tapas Paul, TMC MP, too had surfaced during investigations as he was the director in the company.
On January 25, 2019, CBI arrested Bengali film producer Srikant Mohta for duping Rose Valley group by Rs 25 crore. Mohta's company, Shree Venkatesh Films, has produced many award-winning films like Chokher Bali, Memories In March, Autograph, Raincoat and Iti Mrinalini. The firm also distributes most Bollywood and Hollywood movies in eastern India.