Assets worth Rs 6.8 crore of two Delhi-based businessmen, under probe for allegedly operating shell firms and generating slush funds, has been attached by the ED in connection with its investigation into a Rs 8,000 crore money-laundering and black money racket.
The Enforcement Directorate (ED), in a statement, said today it has issued an order for provisional attachment of assets of Ms Utsav Securities Private Limited, Ms Avail Financial Services Ltd and Ms Sital Leasing and Finance Ltd, which are "controlled" by brothers Virendra Kumar Jain and Virendra Jain.
The central probe agency had claimed in the past that the brothers were instrumental in laundering funds for the family members of former Bihar chief minister Lalu Prasad (his daughter Misha Bharti and son-in-law Shailesh Kumar) as part of their purported hawala operations.
It had arrested the brothers in the past under the Prevention of Money Laundering Act (PMLA).
"The modus operandi of the Jain brothers was to launder the unaccounted money through the process of placement of funds (cash), layering of transactions and final integration of the laundered money into the banking channel camouflaged as legitimate share premium transactions," the agency said.
"The Jain brothers were providing accommodation entries by accepting cash from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company.
"In this process, the Jain brothers earned money as a certain percentage of the unaccounted money converted into share premium," it said.
Thus, the brothers artificially created reserve, surplus and consequent investments in a set of private companies controlled by them.
"Around Rs 8,000 crore in the balance sheets of eight private limited companies was thus created," it said.
The ED had filed a criminal complaint against the duo last year based on a charge sheet filed by the Serious Fraud Investigation Office (SFIO) against certain individuals and firms "for providing accommodation entries by accepting funds from their beneficiaries through mediators and converting the same into share premium transactions in the beneficiary company." It suspects the entire racket to be worth about ?8,000 crore of slush funds and just half of it has been detected according to its latest probe.
The total attachment of properties made in this case so far is Rs 73.89 crore and further probe is under progress, the agency said.
The ED's action was part of the Centre's crackdown against shell or bogus companies which active across the country laundering money and generate black money.
The Central government had also created a special task force of agencies such as the ED, the SFIO, the Directorate of Revenue Intelligence and the Income Tax department in this regard.
Shell companies are those entities which are characterised by nominal paid-up capital, high reserves and surplus on account of receipt of high share premium, investment in unlisted firms and no dividend income.
They are also identified as those with high cash in-hand, private companies as majority shareholders, low turnover and operating income, nominal expenses, nominal statutory payments and stock in trade and minimum fixed asset.