Bank fraud probe: ED seizes jewellery, cash worth ₹24.7 crore

The Enforcement Directorate (ED) has found that three jewellery firms in India showed bogus sale-purchase transactions in their books of accounts, causing a loss of ₹352.49 crore ($47 million) to the State Bank of India (SBI). The ED has seized proceeds of crime worth ₹25.81 crore, including gold-diamond jewellery and cash. The investigation is based on three FIRs registered by the Central Bureau of Investigation (CBI) in December 2022. The promoters of the firms allegedly failed to produce any supportive documents to prove the genuine use of the loans.

MUMBAI: In its money-laundering investigation related to suspected bank fraud, involving three Jalgaon-based jewellery firms, their promoters and directors for causing a loss of ₹352.49 crore to the State Bank of India (SBI), the Enforcement Directorate (ED) has found that bogus sale-purchase transactions had been shown in the books of accounts with the main holding company, Rajmal Lakhichand Jalgaon Partnership Firm.

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A large amount of stock in trade was allegedly found to be completely missing. Against a declared stock of more than 1,284 kg of jewellery, the ED could only trace around 40 kg, ED sources said on Saturday.

“The loans taken against the declared stock were therefore siphoned off by showing bogus purchases for non-existent jewellery,” an ED source said. The agency conducted searches on Thursday at the official-residential premises at 13 locations in Jalgaon, Nashik and Thane belonging to the three accused firms and their promoters, directors and guarantors.

The ED on Saturday said that it seized proceeds of crime worth ₹25.81 crore, including gold-diamond jewellery and cash. The seizures by the agency included 39.33 kg of gold and diamond jewellery valued at ₹24.7 crore and ₹1.11 crore in cash. ED’s teams also seized a large number of suspected documents..

The ED’s investigation pertains to alleged bank fraud committed by the three jewellery firms—Rajmal Lakhichand Jewellers Private Limited, R L Gold Private Limited and Manraj Jewellers Private Limited—and their promoters, directors and guarantors, Ishwarlal Shankarlal Jain Lalwani, Pushpa Devi, Manish Ishwarlal Jain Lalwani and Neetika Manish Jain.

Ishwarlal Jain, a former Rajya Sabha member and a one-time treasurer of the Nationalist Congress Party (NCP), is perceived to be close to the party chief Sharad Pawar.

The ED’s money-laundering investigation is based on three FIRs registered by the Central Bureau of Investigation (CBI) in December 2022 in Delhi. The ED probe also found that the promoters allegedly failed to produce any supportive document to prove genuine utilisation of the loans.

“In fact, they admitted that purposefully, no books of accounts, ledgers, stock registers, invoices or any supportive documents were maintained for the period Financial Year 2003-2014 (the loan disbursement period),” the ED source said.

The SBI had complained to the CBI that the accused firms and persons associated with them had intentionally defaulted on their loans, causing wrongful loss to the tune of ₹352.49 crore (plus interest thereon) to it. The CBI had registered its cases on receipt of complaint from the SBI’s Stressed Assets Resolution Group Commercial (III), Mumbai.

“ED’s investigation revealed that the promoters of the firms had colluded and engaged in fictitious transactions and fabrication of the books of accounts of the three accused firms and its related entities,” the ED source said.

The agency’s analysis of the books of accounts of the firms revealed that their stock on August 17 (Thursday) was brought to zero in spite of them having been hypothecated to the SBI, the source said.

A fictitious entity, with their relatives as dummy directors, was created to apply for new loans fraudulently, according to the probe.

Loans were also routed through a convoluted web of bogus sale-purchase transactions through related parties of Rajmal Lakhichand Group and finally invested in immovable properties by the promoters. A new jewellery business in the name of R L Enterprises and new investments were made in the real estate sector, car dealership and to set up a hospital, the ED probe found.

“Suspicious documents have been recovered from their mobile phones which indicate Foreign Direct Investment proposals of Euro 50 million from a Luxembourg- based entity in the real estate company controlled by co-accused Manish Jain,” the ED source said.

“The probe gathered details of up to 60 properties belonging to the Rajmal Lakhichand Group during the search proceedings that are valued at more than ₹50 crore apart from two benami properties beneficially owned by Rajmal Lakhichand, Manish Jain located in areas of Jamner, Jalgaon, and surrounding areas,” the source said.

The alleged irregularities in the transactions of the three accused firms with the SBI pertained to 2003-2014, ED sources said.