A Trichy-based jewellery chain, which has branches in several places in Tamil Nadu and Puducherry, including Chennai, is under the Enforcement Directorate’s radar for running an alleged Ponzi scheme and duping investors of Rs 100 crore. The agency has conducted searches on the properties of some people associated with the company.
According to reports, the stores run by the firm had suddenly shut in October and, based on complaints, the Economic Offences Wing in Trichy had registered a case against the owner, who has been identified as Madhan. Lookout notices had also been issued against the owner and his wife earlier this month.
In a statement issued on Wednesday, the ED said it was investigating the case registered by the Economic Offences Wing and had conducted searches on Monday, under the provisions of the Prevention of Money Laundering Act (PMLA), 2002, against some of the people accused of running the Ponzi scheme.
The agency said Rs 23.7 lakh in cash, bullion and gold jewellery weighing 11.6 kg, and some incriminating documents have been seized during the searches.
The statement said Rs 100 crore had been collected by Pranav Jewellers under the guise of a gold investment scheme which promised high returns. Not only did the returns not materialise, but the amount invested had also not been given back to the investors.
The investigation revealed that the firm and the accused cheated the public by diverting funds to shell entities and accommodation entry providers under the garb of purchasing bullion or gold ornaments. Accommodation entry providers help companies commit fraud or evade taxes by bringing unaccounted income back into the books and making them look like legitimate transactions.
The Enforcement Directorate said the searches revealed that some suppliers in the books of Pranav Jewellers were entry providers and, during the investigation, they had confessed to having provided accommodation entries to the firm to the tune of over Rs 100 crore. They had also confessed to giving cash to the accused in return for bank payments, the statement said.