New Delhi: The Enforcement Directorate (ED) has arrested two men in connection with an alleged Rs 1,417.86-crore money laundering case involving nearly 36,000 investors who were allegedly duped through investment schemes presented as export-linked businesses.
The agency said S Naveen Kumar and S Muthuselvam were arrested on September 29 under Section 19 of the Prevention of Money Laundering Act (PMLA), 2002. They were subsequently produced before the Special Court for PMLA cases, which remanded them to 15 days of judicial custody.
The arrests followed an investigation into a network of firms that allegedly collected money from investors by promising high returns supposedly generated from agricultural exports.
The ED said its investigation is continuing and that authorities are also tracing assets and examining the wider network associated with the alleged fraud.
ED alleges Rs 1,417.86 crore collected from investors
According to the ED, approximately Rs 1,417.86 crore was collected from 35,759 investors through several investment schemes.
The schemes allegedly operated under names including “UNI”, “FNP”, “FAP” and “UNR”. The agency said these were promoted through entities including M/s Unique Exports, East Valley Agro Firms and other associated firms.
Investors were allegedly told that their money would be used in agricultural export activities and that profits from those operations would generate attractive returns.
However, the ED said its financial investigation found that the companies had not carried out substantial export activity and that the purported businesses were instead used as a means to collect and circulate investors’ money.
The agency has described the arrangements as fraudulent investment schemes and alleged that the underlying transactions were designed to disguise the movement of funds.
Investigation began with Erode crime branch FIR
The money laundering investigation originates from an FIR registered by the District Crime Branch in Erode, Tamil Nadu.
The underlying case was registered under provisions relating to financial offences and the Tamil Nadu Protection of Interests of Depositors Act.
The ED subsequently initiated its investigation under the PMLA, examining the flow of money collected through the investment schemes and the transactions carried out through the associated companies and bank accounts.
The agency’s investigation has focused on how investor funds were collected, transferred between accounts and allegedly withdrawn or diverted.
The ED said the investigation has identified a large network of bank accounts used to move the funds.
More than 100 bank accounts allegedly used
The agency said more than Rs 719 crore was deposited into bank accounts linked to Unique Exports.
Investigators allegedly found that investor funds were subsequently routed through more than 100 bank accounts held by associated companies, family members and close associates.
According to the ED, the extensive network of accounts made it possible to move money between different entities and individuals connected with the alleged investment operation.
The agency is examining these transactions to establish the movement of the proceeds and identify assets that may have been acquired using the alleged illicit funds.
Tracing the money is a key part of the PMLA investigation because the law allows investigators to identify and proceed against property allegedly derived from criminal activity, subject to the judicial process.
ED identifies Naveen Kumar as alleged mastermind
The ED has described S Naveen Kumar, proprietor of Unique Exports, as the alleged mastermind behind the investment operation.
According to the agency, Kumar personally controlled banking operations and the movement of funds associated with the firms.
Investigators allege that substantial amounts received from investors were subsequently transferred through accounts belonging to related entities and individuals.
The agency is examining Kumar’s role in the creation and operation of the investment schemes and the manner in which funds were allegedly moved after collection from investors.
The allegations remain subject to investigation and judicial proceedings.
Rs 390.90 crore allegedly shown as salaries
One of the transactions highlighted by the ED involves payments recorded as salaries.
The agency said Rs 390.90 crore was allegedly shown in the accounts as salary payments, even though the concerned firm had only four employees.
Investigators have alleged that the salary entries were not genuine business expenses but were used to disguise transfers of funds.
The ED is examining the recipients of these payments and the movement of money after it left the accounts of the companies.
The agency has also identified other transactions that it believes were recorded as legitimate business expenses despite the absence of corresponding commercial activity.
Rs 79.56 crore recorded as commodity purchases
The ED said another Rs 79.56 crore was allegedly recorded as purchases of onions and other agricultural commodities.
According to the agency, investigators found no corresponding physical trade involving the commodities.
The agency has alleged that these transactions were used to give the appearance of genuine business activity and mask the transfer of funds.
Such transactions are being examined as part of the wider investigation into whether the firms were conducting genuine export and agricultural operations or were primarily being used to channel money collected from investors.
Muthuselvam allegedly helped attract investors
The ED has also alleged that S Muthuselvam played an important role in designing the investment schemes and bringing investors into the network.
The agency said Muthuselvam invested approximately Rs 42.10 lakh but allegedly received Rs 12.72 crore through returns, referral bonuses and commissions.
According to the ED, he allegedly routed these funds through his personal bank accounts as well as through entities including M/s Dhanyasree Enterprises and M/s Universe369 Infra Private Limited.
Investigators are examining the transactions involving these entities and the role they allegedly played in moving or receiving funds.
The agency has described the payments received by Muthuselvam as part of the financial trail being investigated in the case.
ED searches nine premises
The arrests followed searches conducted by the ED on June 16 and 17.
The agency searched nine premises linked to the investigation under Section 17 of the PMLA.
During the investigation, officials examined financial records, bank transactions and other material relating to the companies and individuals connected with the alleged investment schemes.
The searches helped investigators trace the movement of money and identify transactions that the agency believes were used to disguise the alleged proceeds.
The ED has said further investigation is underway.
Nearly 36,000 investors affected
The scale of the alleged operation is reflected in the number of investors involved.
The ED’s investigation indicates that 35,759 investors collectively deposited approximately Rs 1,417.86 crore into the schemes.
The alleged promise of returns from agricultural exports was central to attracting the investors, according to the agency.
However, the ED’s financial analysis concluded that the entities involved did not conduct substantial export business corresponding to the funds collected.
The agency has therefore focused its investigation on whether the supposed export operations were used primarily as a front for collecting and circulating investors’ money.
Asset tracing continues
Following the arrests, the ED said its investigation into the wider network is continuing.
A major focus of the probe is tracing the proceeds of the alleged offence and identifying assets that may have been acquired or created using the funds.
The agency is also examining the roles of other individuals and entities that allegedly participated in collecting, transferring or receiving the money.
The use of more than 100 bank accounts has expanded the financial trail beyond the two arrested individuals and the principal firms named in the investigation.
Further action will depend on the findings of the ongoing investigation and subsequent proceedings before the PMLA court.
Accusations remain subject to legal proceedings
The allegations against Kumar, Muthuselvam and others are part of an ongoing investigation by the Enforcement Directorate. The agency’s claims have not, by themselves, established criminal guilt, and the accused remain entitled to due process under the law.
The Special Court for PMLA cases has remanded the two arrested men to 15 days of judicial custody while the investigation proceeds.
The case now centres on tracing the alleged proceeds, establishing the financial links between the various entities and determining the role of other people who may have been involved.
With nearly Rs 1,418 crore allegedly collected from more than 35,000 investors, the ED is continuing to investigate the full extent of the financial network and the assets connected to the case.