The Enforcement Directorate (ED), on February 14, 2019, said it has attached properties worth Rs 904 crores, in connection with the DSK Group money laundering case. Deepak Kulkarni, the chairman and managing director of the Group, his wife Hemanti and son Shirish, are accused of cheating 35,000 depositors and investors of Rs 1,129 crores. The immovable properties attached include land, buildings, flats, insurance policies and cash deposits in bank accounts, an official statement from the Directorate said.

The action has been undertaken under the Prevention of Money Laundering Act, 2002, it added. The ED said its investigations had revealed that the trio had conspired, to defraud the general public and formed eight companies to collect funds from people in Mumbai, Pune, Kolhapur and other cities of Maharashtra, for nine years till 2017, when the scam was busted.

The statement said the ‘money trail’ has established that after raising money, the trio laundered the money into 40 other Group companies and used the money to purchase land in India and the US and fund construction projects, among other uses. The money was also used to meet operative expenditure by Group companies, repayments of bank loans, purchase of land in the personal names of the trio or their relatives, paying life insurance premiums and ‘conspicuous consumption’.

Proceeds of the crime were further siphoned off from DSKDL (DS Kulkarni Developers) to Hemanti Kulkarni through close relatives or family members, in the guise of land developing and consenting charges, the money trail revealed, the note said. Citing the case of a land purchase in Phursungi (near Pune), the note said while DSKDL paid Rs 332 crores between 2006-09 for the purchase of land to develop an SEZ, the farmers received only Rs 147.85 crores, while the remaining Rs 184.46 crores were siphoned off to Hemanti Kulkarni. The ED has been carrying out investigations to unearth properties acquired by the accused in the case of funds collected from investors, the note said, adding further probe is on.

DSK case: Court accepts police report for discharge of three bank officials

A special court of the Pune economic offences wing, which is probing a cheating case against the DS Kulkarni Group, has accepted a police report seeking the discharge of three former senior officials of Bank of Maharashtra, citing lack of evidence

January 23, 2019: A local court has accepted the police closure report seeking discharge of three former senior officials of Bank of Maharashtra, in connection with a cheating case against Pune-based developer DS Kulkarni. The Pune Police’s economic offences wing (EOW) had, in October 2018, filed the closure report, saying it did not find sufficient evidence against Bank of Maharashtra’s then CEO and managing director Ravindra Marathe, executive director Rajendra Gupta and former CMD Sushil Muhnot and sought their discharge. Judge DG Murumkar of the EOW special court accepted the report on January 21, 2019.

However, the depositors, who had earlier registered the case against Kulkarni, said they would challenge the special court’s decision in the Bombay High Court. The Pune Police’s EOW had, in June 2018, arrested Marathe and other officials for allegedly misusing their official position, for sanctioning loans to Kulkarni’s construction firm – DS Kulkarni Developers Ltd (DSKDL). The bank officials were later released on bail. Defence lawyer Harshad Nimbalkar, on January 21, 2019, said the court accepted the Pune Police’s closure report, after considering all aspects of the case. He claimed the police arrested the bank officials for ‘no reason’.

According to Nimbalkar, a loan of Rs 600 crores was given to DSKDL by six banks, which were part of a consortium. In that consortium, Bank of Maharashtra had given a loan of Rs 100 crores and it had been approved after due diligence, he said. “So, there is no relation between the present case of cheating and the bank’s role,” the lawyer said. According to a Bank of Maharashtra official, Marathe retired in November 2018 and Gupta’s term ended in December 2018.

DSK Group cheating case: Bank of Maharashtra CMD among six held

The EOW of the Pune Police has arrested Bank of Maharashtra’s CMD, among others, for their failure to stick to the RBI guidelines, while sanctioning loans to embattled real estate developer DS Kulkarni and his wife

June 21, 2018: The Economic Offences Wing (EOW) of the Pune Police, on June 20, 2018, arrested six people, including the serving and a former CMD of the Bank of Maharashtra, in a cheating case lodged against city-based real estate developer DS Kulkarni and his wife, an official said. These bank officials did not stick to the RBI guidelines and did not verify, if the loan amount was being used only for the project for which it had been sought, the EOW told a local court, while seeking their custody.

The bank’s present chairman and managing director Ravindra Marathe, executive director Rajendra Gupta, zonal manager Nityanand Deshpande and the bank’s former CMD Sushil Muhnot, were arrested. Kulkarni’s CA Sunil Ghatpande and vice-president Rajiv Newaskar of the engineering department of DS Kulkarni Developers Ltd (DSKDL), were also apprehended. While Deshpande was arrested from Ahmedabad, Muhnot was picked up from Jaipur. All the others were arrested from Pune, the police said.

They were booked under various sections of the IPC and the Prevention of Corruption Act. “As part of our probe into the cheating case against Kulkarni, it came to light that these bank officials colluded with DSKDL, by misusing their powers and authority, with dishonest and fraudulent intention to sanction and disburse the amount under the garb of a loan,” said Sudhir Hiremath, deputy commissioner of police (cyber and economic offences).

In May 2018, the city police had filed a 37,000-page charge sheet against Kulkarni and his wife in the case. As per the charge sheet, the total scam was worth Rs 2,043.18 crores. The accused had floated nine different firms, to siphon off the funds collected from 33,000 investors and fixed-deposit holders, who were promised good returns on their FDs.

Of the total scam amount, the deposit and loan fraud was to the tune of Rs 1,083.7 crores, banking and non-financial institutions-related fraud of Rs 711.36 crores, debentures fraud of Rs 111.35 crores and fraud related to phursungi land purchase is of Rs 136.77 crores, the EOW officials had said. The police were probing the role of these bank officials, for allegedly sanctioning loans to the builder without following due diligence.

According to the complaint filed with the EOW by one of the depositors, investors put in lakhs of rupees in a fixed-deposit scheme of the DSK Developers but they neither received the interest, nor the principal amount. The EOW had booked the Kulkarnis under various sections of the Maharashtra Protection of Interest of Depositors (MPID) Act, along with IPC sections 420 (cheating and dishonestly inducing delivery of property), 406 (criminal breach of trust) and 34 (common intention). The developer and his wife were arrested from Delhi on February 17, 2018, by the Pune Police. With today’s arrest, the total number of arrests in the case has gone up to 12. Kulkarni’s son Shirish’s pre-arrest bail application was rejected by the Supreme Court on June 19, 2018 and he was likely to be arrested in the case, the police said.

Those who were arrested today, were produced before a court in Pune and were remanded to police custody till June 27, 2018. While seeking their custody, the police told the court that the accused bank officials – Gupta, Munhot and Deshpande – did not follow the set guidelines of the Reserve Bank of India, while sanctioning the loan amount and disbursing a part of it to DSKDL.

“The bank officials, under the consortium, had sanctioned a loan of Rs 100 crores to Kulkarni’s Dream City Project, when other banks in the consortium were yet to give their nod for funding to the project,” the remand plea said.

Further, after sanctioning the loan, the accused made the changes in the original proposal and disbursed Rs 50 crores to Kulkarni, it said. The EOW also told the court that the loan was to be used for a particular project but BOM officials did not ascertain if the DSK Group was using the money for the stated purpose.

Meanwhile in a statement, Bank of Maharashtra said its exposure to DS Kulkarni Developers was around Rs 94.52 crores, which was fully secured. “Our total outstanding exposure to DS Kulkarni Developers is to the tune of Rs 94.52 crores, which is fully secured with primary and collateral securities,” it said. The recovery process had already been initiated by the bank and some of the properties were due for auction, it said. The bank also declared DS Kulkarni Developers and its promoters as willful defaulters and claimed that the loans sanctioned to the firm were as per the bank’s lending norms.

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