Group Companies Found Guilty In Saradha Scam

The Serious Fraud Investigation Office (SFIO) has founded group companies guilty in the multi-crore chit fund scam. The SFIO concluded that the schemes run by Saradha Group’s 14 companies ran Ponzi Schemes, which were in violation of several provisions of the Companies Act, 1956. The investigating agency has completed the investigation and shared its report with Central Bureau of Investiations (CBI).

The agency in the course of its investigation found out that the promoters, directors and other officials of these firms were using funds collected from the general public rather than income generated from investments.

“The companies, their promoters, directors and managerial personnel have been found to be guilty on many counts for violation of various provisions of the Companies Act, 1956 including Sections 58A and 628 dealing with illegal collection of deposits and false statements, etc. Companies of the group which were declared by SEBI to be carrying out unauthorized ‘Collective Investment Schemes’ (CIS) will be prosecuted for violation of the SEBI Act instead of Section 58A of the Companies Act, 1956, as the former carries longer terms of imprisonment,” said a statement from Ministry of Corporate Affairs.

It also adds that the agency has found out several instances of violation of the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. “As prosecution under this law are to be initiated by the State Governments concerned, the Report along with evidence is being shared with the CBI. The Report is also being shared with SEBI for proceeding against companies which were found to be running unauthorized/ illegal Collective Investment Schemes (CIS),” states the ministry in the statement.

In one of its findings, the SFIO has also noted that the companies have violated provisions of the Indian Penal Code. “Since, CBI is now investigating cases under the IPC under orders of the Supreme Court, it has been decided to share evidence collected by the SFIO with CBI so as to avoid duplication in prosecutions”, said the ministry in the statement.