Citi fraud: ED seeks FIR, may file money laundering case

The Enforcement Directorate has sought a copy of the FIR filed by the police on the Rs 400 crore Citibank fraud with a view to lodge a separate case of money laundering against the perpetrators of the scam.

Official sources said the directorate has sought the first information report (FIR) on its own initiative and a copy is likely to be provided by the police soon.

The police has pegged the extent of the fraud perpetrated by Citibank Relationship Manager Shivraj Puri at Rs 400 crore and said it involved the accounts of about 29 entities, including the promoters of the Hero Group.

The entities whose funds were diverted by Puri into the accounts of his relatives include Hero Corporate Services (Rs 13.75 crore), OKS Sapantak (Rs 2 crore) and Satyam Auto (Rs 25 crore).

Furthermore, Mayar Infratech (Rs 24 crore), Spaid (Rs 62 crore), Karopat Pad (Rs 8 crore), Sunil Kant and Sons (Rs 3 crore) Aero Infratec (Rs 25 crore), Hero Exports (Rs 97 crore), Rekha Munjal (Rs 5 crore), Munjal Investments (Rs 2.5 crore) and Munab Braej (Rs 71 crore) fell prey to the scam.
    
Besides the entities named in the report, the police said they were looking into the records of other entities that claim to have lost money in the fraud uncovered at Citibank's Gurgaon branch late last month.
    
The Enforcement Directorate, which exclusively deals with foreign exchange violations and money laundering charges, will look at the possibility of registering a case under the Prevention of Money Laundering Act, sources said.
    
Under the PMLA, the directorate has the power to attach all movable and immovable properties of the accused, besides anything that appears to have been bought using the laundered money.
    
Sources said that if a money laundering case is filed, the directorate may also seek custody of the accused for detailed questioning.

Investigations into the irregularities at Citibank came in the wake of a complaint that the bank was offering abnormal returns on an investment scheme for investors. It was found that Puri had collected the money on the basis of a fake Sebi circular that claimed the schemes had the market regulator's approval.
    
Securities and Exchange Board of India (Sebi) later wrote to the bank saying no such scheme was approved by it.
    
The police also alleged that Puri used to give fake receipts and bank statements to his clients to mislead them. The police report filed before a city court here said Puri used to divert the money invested by the entities into demat accounts held by his relatives in brokerage firms Religare and Bonanza.
    
The FIR on the fraud was filed by Citibank Assistant Vice-President Binu Somen, following which Puri surrendered on December 30. Besides Puri, the Associate Vice-President of Hero Corporate Services, Sanjay Gupta, was also arrested for his alleged involvement in the scam.
    
Gupta allegedly misappropriated Rs 250 crore belonging to the Hero Group entities and promoters, which was collected on the pretext of legitimate investment.