The Enforcement Directorate (ED) on Wednesday arrested three promoters of the AgriGold Group of companies, who were accused of money laundering and operating a ponzi scheme, allegedly cheating 32 lakh investors out of Rs 6,380 crore. All the three accused, Avva Venkata Rama Rao, Avva Venkata Seshu Narayana Rao and Avva Hema Sundara Vara Prasad had cases registered against them in Telangana, Andhra Pradesh and Karnataka.
The accused collected money from the public with the promise of providing high-interest rates for their investments or providing developed plots and farmlands for the sum invested. Venkata Rama Rao along with his seven brothers and other associates had created several shell companies to funnel the investor money abroad, said an ED official, reported The Hindu.
AgriGold had employed several agents on a commission basis to get people to invest with them. Of the 32 lakh investors, about 11.58 lakh persons who were cheated were from Andhra Pradesh followed by 4.81 lakh from Karnataka and 1.67 lakh from Telangana. The company claimed to the ED that they owned only 5.5 lakh plots, of which 1.06 lakh plots were registered to investors.
The investors were not informed about the land's market value, survey numbers and other details nor did the company have permission from the Reserve Bank of India to collect deposits from the public.
The investors’ money was found to have been allegedly siphoned off to foreign countries and invested in other private companies owned by Avva Venkata Rama Rao's relatives. The ED has so far estimated that Rs 943.96 crore was diverted to sectors like power infrastructure, entertainment, food industry, travel agencies, chemicals, insurance, data processing, timber, software and other sectors.
The AgriGold group was also named in the Paradise Papers Leak, where global data on offshore holdings of various entities came out in 2017. The company had employed a law firm in the Cayman Islands to help them funnel money offshore, the ED alleged.