NSEL investors file complaint to EOW

Massive fraud, criminal conspiracy, cheating and criminal mis-appropriation; destruction of evidence levelled against promoters, borrowers

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Seeking legal recourse against the default of the National Spot Exchange Ltd, the Financial Technologies promoted spot commodity trading platform facing currently Rs 5,500 crore payment crisis, around 58 investors and 17 brokers / members have jointed filed a criminal complaint with the economic offence wing (EOW) of Mumbai police.

The complaint was filed against NSEL, Jignesh Shah, the board of director and executives of NSEL including Amit Mukherjee and Jai Bhaukhundi, auditor Mukesh Shah and 24 defaulters and their clients, a statement from NSEL Investors’ Forum said.

The complaint makes a case that Jignesh Shah is the brain, trust and alter ego of NSEL and primarily responsible for the affairs and the fiasco at NSEL and that he abused his position to create a false impression in the minds of investors regarding the legitimacy of the operations at NSEL. Noted senior advocate – Amit Desai along with law firm AZB & Partners is advising the complainants in the matter.

The complaint makes a strong case that 99% of delivery business is a fraud, evidenced by complete absence of underlying goods and issuance of fake warehouse receipts. The complaint alleges that NSEL built its business model around trading in “non existent” goods and giving investors an impression that goods were in warehouses, when none existed and produces several documents supporting the active marketing done by Jignesh Shah.

The Complaint also alleges cozy relationships between the defaulters, promoters and management wherein goods were stored in premises of the defaulters, which did not have storage capacity for stated quantities, in each case, through non-arms length relationships and in all such cases NSEL certified such warehouses – “Exchange Accredited”.

The complaint alleges a massive conspiracy by the accused and violations of the Indian Penal Code involving criminal breach of trust, forgery, criminal mis-appropriation of assets, cheating (sections 406, 407, 409, 417, 420, 424, 465, 467, 468, 471 r/w 120B of the IPC).

The offences are of the utmost seriousness inviting over 7 years of rigorous imprisonment if proven. Investors are hopeful the complaint makes a strong case out for every enforcement authority (CBI, SFIO) to take effective action including by ED under the provisions of the PMLA.

The complaint alleges a strong apprehension that NSEL and Shah may destroy evidence and alter records of NSEL and immediate steps must be taken to preserve records so that the guilty can be brought to book. There is a concern also that Shah may escape from India, reminiscent of earlier scams in India.