IAS officer, builders misused power in high-value fraud case, says ED

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Former Vasai-Virar civic chief Anil Pawar and three others, held in a money laundering case, demonstrated a "deliberate" misuse of administrative powers and financial system to perpetrate a high-value fraud, the Enforcement Directorate told a Mumbai court on Wednesday.

"Hawala and angadia" channels were used to launder the proceeds of crime, not just within Maharashtra, but across other states too, the ED told the special court, which later sent the quartet, including two real estate developers, to jail a week after their arrest.  The hawala system refers to an informal channel for transferring funds from one location to another. Hawala operations are deemed illegal cash transactions in India.  Angadias are traditional couriers who offer their services to transfer cash, diamonds and jewellery for a fee. Besides IAS officer Pawar, Vasai-Virar City Municipal Corporation (VVCMC) town planner Y Shiva Reddy and two builders -- Sitaram Gupta and Arun Gupta -- are the other accused in the case linked to construction of illegal buildings in Vasai-Virar, a city located on Mumbai's outskirts in adjoining Palghar district.  All four were produced before a special judge hearing cases under the Prevention of Money Laundering Act (PMLA), Raju Rote, who remanded them to 14-day-judicial custody. Arrested on August 13, the accused persons were in ED custody till August 20.  While the federal probe agency did not press for their further remand, it stressed their judicial custody was "necessary to safeguard the integrity of the investigation, which remains at a crucial stage".  The probe agency contended before the court that the accused have demonstrated the capacity to orchestrate a "sophisticated fraud by a well knitted cartel of officers, architects, builders and liaisoners".  "The accused persons have demonstrated a deliberate and calculated misuse of administrative powers and financial system to perpetrate a high-value fraud," the ED said.  The anti-money laundering agency submitted that the act of the accused "not only caused substantial wrongful loss, but also undermined the integrity of the general public and the authorities, which were actually established for catering and assisting the people".  Citing the nature of offence and sophisticated methods used by the quartet, the financial crime fighting agency noted the modes indicated they "possess the means and motive to obstruct the investigation, tamper with digital & documentary evidence, and influence key witnesses." Further, the probe agency submitted it was in the process of identifying the exact quantum of proceeds of crime generated and laundered in the matter. Investigation carried out so far has revealed "a well organised mechanism was operative to channelize the proceeds of crime generated from the offence committed by the accused persons", it said.  The proceeds of crime have been laundered not just within Maharashtra, but they also have interstate and cross-border linkages, the ED alleged. Investigation revealed cash generated from the offence was attempted to be brought back in bank accounts of relatives (of accused) and projected as income from legitimate sources, the central agency submitted before the court. The ED underlined that a real and substantial apprehension exists that the accused may influence witnesses, manipulate systems, and dispose of assets acquired through money laundering. Hence, they must be sent to judicial custody, the central agency said in its plea which was allowed by the court.  The case pertains to illegal construction of residential-cum-commercial buildings on government and private land under jurisdiction of VVCMC.  The probe agency alleged that over a period of time, 41 illegal buildings were constructed on private and government land parcels reserved for a sewage treatment plant and dumping ground as per the approved development plan of Vasai-Virar.  The accused developers (Sitaram and Arun Gupta) looted common citizens by constructing illegal buildings and subsequently selling residential apartments and commercial units in them by fabricating approval documents, the ED said. The developers deceived buyers by selling rooms in these buildings despite knowing the structures were unauthorized and slated for demolition and thereby committing fraud, the probe agency added.